[Senate Hearing 114-224]
[From the U.S. Government Publishing Office]







                                                        S. Hrg. 114-224

                       A FRESH LOOK AT THE IMPACT
                   OF THE MEDICAL DEVICE TAX ON JOBS,
                        INNOVATION, AND PATIENTS

=======================================================================

                                HEARING

                               before the

                      SUBCOMMITTEE ON HEALTH CARE

                                 of the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION
                               __________

                             APRIL 23, 2015
                               __________

                                     
   
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            Printed for the use of the Committee on Finance
                                   ______

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                          COMMITTEE ON FINANCE

                     ORRIN G. HATCH, Utah, Chairman

CHUCK GRASSLEY, Iowa                 RON WYDEN, Oregon
MIKE CRAPO, Idaho                    CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas                  DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming             MARIA CANTWELL, Washington
JOHN CORNYN, Texas                   BILL NELSON, Florida
JOHN THUNE, South Dakota             ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina         THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia              BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio                    SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana                ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina

                     Chris Campbell, Staff Director

              Joshua Sheinkman, Democratic Staff Director

                                 ______

                      Subcommittee on Health Care

               PATRICK J. TOOMEY, Pennsylvania, Chairman

CHUCK GRASSLEY, Iowa                 DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas                  MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming             ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina         BENJAMIN L. CARDIN, Maryland
DANIEL COATS, Indiana                SHERROD BROWN, Ohio
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina

                                  (ii)
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Toomey, Hon. Patrick J., a U.S. Senator from Pennsylvania, 
  chairman, Subcommittee on Health Care, Committee on Finance....     1
Stabenow, Hon. Debbie, a U.S. Senator from Michigan..............     3
Coats, Hon. Daniel, a U.S. Senator from Indiana..................     5
Heller, Hon. Dean, a U.S. Senator from Nevada....................     6

                               WITNESSES

Heugel, Bruce A., senior vice president and chief financial 
  officer, B. Braun of America, Bethlehem, PA....................     7
Farrar, Quinton J., principal partner, West Surry Strategies, 
  LLC, Keene, NH.................................................     9
Donisvitch, Alyra, patient, Manchester, ME.......................    11
Judge, Mark, patient advocate, Pittsburgh, PA....................    12

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Coats, Hon. Daniel:
    Opening statement............................................     5
Donisvitch, Alyra:
    Testimony....................................................    11
    Prepared statement...........................................    27
Farrar, Quinton J.:
    Testimony....................................................     9
    Prepared statement...........................................    28
Hatch, Hon. Orrin G.:
    Prepared statement...........................................    30
Heller, Hon. Dean:
    Opening statement............................................     6
Heugel, Bruce A.:
    Testimony....................................................     7
    Prepared statement with attachments..........................    31
Judge, Mark:
    Testimony....................................................    12
    Prepared statement...........................................    43
Stabenow, Hon. Debbie:
    Opening statement............................................     3
Toomey, Hon. Patrick J.:
    Opening statement............................................     1
    Prepared statement...........................................    44

                             Communications

Advanced Medical Technology Association (AdvaMed)................    47
Alcon Research, Ltd..............................................    48
Alliance for Aging Research......................................    49
American Association of Neurological Surgeons (AANS).............    49
American Dental Association (ADA)................................    50
ARC Medical, Inc.................................................    51
Biocom...........................................................    51
Carmell Therapeutics Corporation.................................    52
Cook Group Incorporated..........................................    53
CryoLife, Inc....................................................    56
ELITechGroup, Inc................................................    57
Exactech.........................................................    58
Florida Economic Development Council.............................    59
Florida Medical Manufacturers Consortium (FMMC)..................    60
Gradient Technologies LLC........................................    61
Healthcare Leadership Council....................................    62
HoverTech International..........................................    63
LifeScience Alley................................................    63
Medical Device Manufacturers Association (MDMA)..................    64
Medical Imaging and Technology Alliance (MITA)...................    65
NeoTract, Inc....................................................    67
OptiScan Biomedical Corporation..................................    67
Pennsylvania Biotechnology Association...........................    68
PhotoMed Technologies, Inc.......................................    69
Research!America.................................................    70
RoundTable Healthcare Partners...................................    71
Siemens Healthcare...............................................    72
The Spectranetics Corporation....................................    75
3D Medical Manufacturing, Inc....................................    77
U.S. Chamber of Commerce.........................................    77
Vapotherm........................................................    80
Welch Allyn Inc..................................................    81
Wenzel Spine, Inc................................................    82
Zimmer...........................................................    83
ZOLL LifeVest....................................................    83
 
                   A FRESH LOOK AT THE IMPACT OF THE
                      MEDICAL DEVICE TAX ON JOBS,
                        INNOVATION, AND PATIENTS

                              ----------                              


                        THURSDAY, APRIL 23, 2015

                               U.S. Senate,
                       Subcommittee on Health Care,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:03 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. 
Patrick J. Toomey (chairman of the subcommittee) presiding.
    Present: Senators Grassley, Thune, Portman, Coats, Heller, 
Scott, Stabenow, and Cardin.
    Also present: Republican Staff: Brad Grantz, Staff 
Director, Subcommittee on Health Care. Democratic Staff: Kim 
Corbin, Legislative Counsel; and Sarah Shive, Legislative 
Counsel.

  OPENING STATEMENT OF HON. PATRICK J. TOOMEY, A U.S. SENATOR 
   FROM PENNSYLVANIA, CHAIRMAN, SUBCOMMITTEE ON HEALTH CARE, 
                      COMMITTEE ON FINANCE

    Senator Toomey. Welcome, ladies and gentlemen. The Senate 
Finance Subcommittee on Health Care will now come to order.
    First of all, I want to thank Senator Hatch for encouraging 
us to begin this process of exploring the medical device tax 
with this hearing. I want to thank Ranking Member Stabenow for 
all of her leadership on health care issues generally, and her 
interest in exploring this topic as well.
    I am very grateful to our witnesses for taking the time, 
and in some cases traveling a considerable distance, to be with 
us to share their expertise and their perspective on a really 
important issue. So, I will make no bones about it, my strong 
preference would be to have a full and permanent and complete 
repeal of the medical device tax, because it is my view that 
this tax is doing considerable harm--economic harm. I am 
concerned about the impact that it has on innovation in the 
medical device industry, and I am really concerned about the 
impact it has on individual patients--current patients and 
future patients.
    So we will discuss this. I want to start with just a little 
illustration of some of the absolutely wondrous things that are 
being invented and developed in this space. I have in my hand, 
if you can see this, a ventricular assist device. This is a 
mechanical heart pump for those with congestive heart failure. 
This has kept 7,000 Americans alive while they await a 
transplant. Three hundred thousand people die every year in our 
country from heart failure. It took 5 years to get the FDA 
approval for this.
    The company, HeartWare, that developed this product spent 
$200 million on research and development over the first 5 years 
of their existence as an American company, and they racked up 
$112 million of losses before they ever were able to begin to 
turn a profit, but think of the lives that were saved by virtue 
of this remarkable invention.
    Here we have a spinal implant. For those who are not close 
enough to see, it looks remarkably like a vertebrae, but it 
clearly is not. It is used to mend bone fractures. This 
material is an alternative for over 400,000 people annually who 
have spinal fusion surgery to deal with severe and chronic pain 
in the lower back. It is made by a company called Synthes. The 
company employs hundreds of people in my State of Pennsylvania 
in Westchester.
    Last, this is a vagal nerve stimulator. This is implanted 
in the chest, surgically implanted, this very device, and it 
sends an electrical current to the patient's brain, and it 
treats epilepsy and it treats treatment-resistant depression. 
Millions of Americans suffer from each of those maladies. The 
company that makes this also experienced, as so many start-up 
companies in the medical device space do, losses for years as 
they were in the stages of developing the product and bringing 
it to market and getting the approvals. In fact, they incurred 
$250 million in losses before they were able to turn around. 
Sadly, the CEO has announced that, in part to offset the costs 
of the medical device tax, they are going to build their next 
factory in Costa Rica rather than in the United States.
    One of the big concerns is that this tax on sales is going 
to threaten America's global leadership in this space. The 
medical device industry is a huge economic contributor, not 
just in my State of Pennsylvania but across the country. The 
range of products is stunning, from pacemakers to orthodontics, 
hearing implants, surgical tools, knee braces, joint 
replacements. The industry employs over 400,000 people 
directly. There are another 2 million people who are indirectly 
employed because they are vendors or supplier companies to the 
medical device industry.
    Interestingly, we had a big debate yesterday about trade 
policy, as Ranking Member Stabenow knows very well. The medical 
device industry, for the last 5 years, has run a substantial 
trade surplus. Because we are the leaders in the world, we make 
the best products, and we sell them all around the world, we 
have had a trade surplus, on average, over the last 5 years.
    So it is a big, it is an innovative, it is a dynamic 
industry. It pays good wages above the averages. It improves 
the quality of our lives through the products that it makes, so 
it is really important, I think, to all of us that this 
industry thrives.
    My view is that the medical device tax is not only onerus 
in its scale, but it is bad in its design. It is a tax on 
sales, not a tax on profits, so these companies that I alluded 
to that spent large sums of money making these products and 
bringing them to market, they were losing money for years.
    Even when they started to have sales the initial years, 
those sales were not enough to be profitable. To impose a tax 
on those sales prior to there even being a profit just adds to 
the debt load that these companies have to carry, and there is 
only so much debt that can be financed. This is one of the 
concerns that I have. The design of this tax is very, very 
unfortunate.
    I think we are going to hear from some of the witnesses 
that this has cost us jobs across the country already. Some 
companies have had to cancel plans to expand; others are 
looking to move to other places.
    I want to read an excerpt from a letter from Carmel 
Therapeutics, which is a Pittsburgh-based company. The 
president and CEO is Alan West, and he sent me a letter last 
month in which he states that ``it has also been''--the ``it'' 
he is referring to is the medical device tax--``a strong factor 
in discouraging venture capital from even considering medical 
device and early stage deals. Currently, the majority, 55 
percent, of clinical trials are now being conducted overseas, 
and most novel medical devices are now launched outside the 
U.S. 4 to 5 years before they are available in the United 
States, according to the U.S. Department of Commerce. This is 
the complete opposite of the situation only a few years ago 
when the U.S. was taking the lead. As a case in point, my 
company, Carmel Therapeutics, conducted a clinical trial in 
South Africa and is planning to launch our first product next 
year in Europe.''
    As I said earlier, I am concerned that, of course, if we 
slow down the pace of new development of new medical devices, 
we will harm the patients who would benefit from these. So for 
these and other reasons, I am very hopeful that we will, in 
this Congress, be able to repeal the medical device tax. I am 
pleased that we have had bipartisan support for this concept. 
We had 79 U.S. Senators, obviously big majorities in both 
parties--every Republican and a large majority of Democrats--
voting in favor of an amendment to the budget resolution in 
2013.
    I am delighted that we have bipartisan support for the bill 
to repeal it entirely. Again, I want to thank Chairman Hatch 
for his cooperation in this effort. I want to thank the members 
of the committee who are here, and the witnesses.
    At this time, I would yield to our ranking member, Debbie 
Stabenow. Again, I want to mention how grateful I am for her 
leadership on health care issues in general, her leadership on 
this committee, and, at this time, I recognize her for an 
opening statement.
    [The prepared statement of Senator Toomey appears in the 
appendix.]

          OPENING STATEMENT OF HON. DEBBIE STABENOW, 
                  A U.S. SENATOR FROM MICHIGAN

    Senator Stabenow. Well, thank you very much, Mr. Chairman. 
It really is an honor to be the ranking member on the Health 
Subcommittee. It was health care, which has been a lifelong 
passion of mine, that actually got me into public service. I 
will not say how many years ago, it makes me feel too old, but 
it is something that I have been involved with my entire life.
    Thinking about last night, because it does feel like we 
never went home, I think the good news for your industry, from 
a trade standpoint, is that this tax does not apply to exports. 
So that is good news, because we want you to be here and be 
exporting. So, that is at least one good piece about this.
    Today we want to hear testimony about the medical device 
industry and your feelings on the medical device tax, but also 
to focus on the vital purpose that you serve in the delivery of 
top-quality health care. I think that is really what the point 
is: creating life-saving technologies, which the chairman spoke 
about. I do not have anything to hold up, but it is amazing to 
look at these items.
    From simple things like an insulin pump or the various 
supplies like our witness, Ms. Donisvitch, uses to control her 
diabetes, to an arsenal that another witness, Mr. Judge, and 
his doctors are relying on to combat his cancer, like imaging 
scans and surgical tools and radiation beams, the medical 
device industry's work and creativity really are a part of 
every medical success story and are so very important to health 
care, very important to our economy.
    The industry does these things by investing in critical 
research and development that holds the promise of leading to 
the next medical breakthrough. I think it is also incredibly 
important to underscore the partnership--public-private 
partnership--in our country and the need to continue to invest 
in basic research, which then leads to the next steps for the 
industry to be able to move forward, as we move forward 
ourselves, debating things like, do we have sequestration caps, 
what is the budget going to look like? Investing in basic 
research is a very important piece of all of this if we want to 
continue to have those innovations.
    So the next new technology could help a child to walk or 
hear better, or help heal our seniors' wounds, help our doctors 
and nurses give better, safer, more efficient care.
    In addition to spurring innovation, this industry is 
helping to spur local and State economies all around the 
country. Because of key investments by the industry, American 
manufacturing is growing. This is a form of manufacturing.
    We have lots of manufacturing in Michigan, and one of those 
types of manufacturing comes from great industries where, 
instead of an assembly line, someone is sitting at a desk doing 
that work, and on a very intricate, individual basis. I know 
firsthand--watching this innovation, the investments, and the 
exciting breakthroughs--because of what is happening in my home 
State of Michigan. Because of how important this industry is to 
Michigan, I helped lead the effort, when we were writing the 
Affordable Care Act, to actually cut the original proposed tax 
in half to the level that it is today as a step forward.
    The good news I want to conclude with is that the 
Affordable Care Act is working and saving lives: 16.4 million 
Americans now have insurance thanks to the Affordable Care Act. 
Because of the premium tax credits that we all in this 
committee worked on so hard to secure to make it more 
affordable, more than half of consumers in the marketplace have 
a plan with a premium of under $100. Let me say that again: 
more than half of consumers in the marketplace have insurance 
plans that cost less than a cell phone plan or a cable 
television bill.
    Because of the strong insurance market reforms, fewer 
Americans are going into bankruptcy due to medical bills. 
Because of Medicaid expansion, over 11 million additional 
Americans have coverage now under Medicaid or the Children's 
Health Insurance Program, and that means millions of Americans 
now have access to lifesaving medical devices, things that had 
been financially out of reach for way too long.
    So, Mr. Chairman, I remain committed to working with you 
and the medical device industry on this tax issue. It is also 
critical that, whatever approach we take, we protect the 
ability of people to be able to have the health care that they 
need and deserve, to have affordable insurance, and to keep 
access to medical devices. We all know how important it is that 
any solution be fiscally responsible and not add to our 
Nation's deficit.
    The stories we are going to hear from Ms. Donisvitch and 
Mr. Judge are exactly the reason that we fought so hard, and 
continue to fight, for the Affordable Care Act and for the 
affordability provisions that finally put health insurance and 
critical medical innovations within reach of so many American 
families.
    So I look forward to hearing from our witnesses, Mr. 
Chairman, and working with you on this issue.
    Senator Toomey. Thank you very much, Senator Stabenow.
    Would any other members like to make an opening statement? 
Senator Coats?

            OPENING STATEMENT OF HON. DANIEL COATS, 
                  A U.S. SENATOR FROM INDIANA

    Senator Coats. Well, thank you, Mr. Chairman. I will try to 
be brief. I do not want to repeat what has been said.
    Indiana is the home to over 300 medical device companies, a 
major manufacturing industry in our country offering high-
skilled jobs with literally 56 percent, on average, higher pay 
than other manufacturing jobs in Indiana. But more than that, 
more than what it does to our economy, what has already been 
mentioned, the improvements in health and lifesaving results of 
medical device innovation are truly, truly extraordinary.
    We as a Congress, and we as a Federal Government, ought to 
be doing everything possible to encourage this industry for 
moral reasons alone, but for also a number of economic reasons 
and the fact that it is making a significant difference in 
people's lives.
    The tragedy of what has happened here is that, while there 
is as much bipartisan support for this legislation as any other 
piece of legislation in the last 5 years within the Congress, 
we are unable to get to the finish line. There is one person 
standing in the way of our passing this on a bipartisan basis--
79 votes in the last Congress, all 45 Republicans and 34 
Democrats. I do not know what the ratio is now, but it 
significantly exceeds anything else that we have been dealing 
with.
    Yet, the White House is reluctant to do this. It has been a 
pay-for, obviously, for a failed health care act. But it is an 
egregious tax that is not only costing a lot of companies a lot 
of money that they could have been putting into innovation, but 
has also denied people the ability to improve their lives and 
potentially save their lives.
    In 2013, in testimony before the Senate Budget Committee, 
Cook Medical chairman Steve Ferguson stated, and I am going to 
quote because this, I think, reflects what the consequences of 
not taking action are: ``Cook has made the difficult decision 
that without repeal of the medical device tax, we will move 
important new product lines outside of the United States. Our 
previous plans to open five new manufacturing facilities in 
American towns are now on hold as we have to use this capital 
intended for these projects simply to pay the excise tax.''
    It is more than time that Congress took up this 
legislation, passed a bill on a bipartisan basis, delivered it 
to 1600 Pennsylvania Avenue, and, if necessary, was prepared to 
override a presidential veto. We desperately need to move 
forward with this legislation and take action. We have had all 
the hearings that we need, and this one is important. This is 
part of our moving forward.
    I have small companies in Indiana that are researching and 
pouring money into innovative improvements and yet are denied 
the opportunity to go forward. They are losing money in the 
research phase, which they cannot capture through the sales 
that they have because they are taxed not on profits, but they 
are taxed on sales. Excise tax is one of the most egregious 
taxes ever dreamed up by any form of government.
    So, as you can tell, I am pretty exercised about this whole 
issue. I am really happy that you are having this hearing, and 
I want to move from this hearing, Mr. Chairman--and I would 
mention the ranking member also because this is a bipartisan 
effort. Let us get to the point where we no longer allow the 
executive branch to say, well, Congress has not moved on that. 
Let us move on this. Let us get a bill there, and, if 
necessary, let us override a veto and get this excise tax 
repealed.
    Thank you, Mr. Chairman.
    Senator Toomey. Thank you very much, Senator Coats.
    Senator Heller?

            OPENING STATEMENT OF HON. DEAN HELLER, 
                   A U.S. SENATOR FROM NEVADA

    Senator Heller. If I may. Mr. Chairman, thank you. And to 
the ranking member, Senator Stabenow, thank you very much for 
holding this hearing. I will be brief, but I probably will be 
repetitive. [Laughter.]
    We are here to talk about the impacts of Obamacare's 
medical device tax on jobs, innovation, and, most importantly, 
patients. So let us begin with jobs.
    This is an issue that is critical to my home State of 
Nevada, especially as we continue working to bring one of the 
Nation's highest unemployment rates down. At a time when one of 
our top priorities in Nevada is expanding and diversifying the 
economy, we need pro-growth policies, not new taxes on 
promising industries.
    But the medical device tax does not create jobs or grow the 
economy. It funnels money into the general fund that could be 
spent on more employees or to continue research and 
development. In fact, the Medical Device Manufacturers 
Association reports that three-quarters of members' companies 
have slowed or halted the creation of new jobs thanks to this 
tax.
    Second, we talk a lot about the ideas of promoting 
innovation here in Washington. The medical device industry is a 
perfect example of a sector where innovation is a fundamental 
part of its success. Yet, here we have an excise tax that 
stifles the development of new products that improve the 
quality of life for Americans, help us live longer and 
healthier lives. Excise taxes are often used to deter certain 
behavior, alcohol or tobacco consumption. In this case, the 
medical device tax deters innovation and the use of devices 
that can make our lives better.
    Which brings us to the most important aspect of this 
discussion: how patients are harmed by this tax. Like nearly 
any tax, the burden ultimately falls on the consumer. Not only 
do patients end up paying more, their options are more limited, 
and they have to wait longer for new devices, or manufacturers 
are forced to cut back on their efforts. Medical device 
manufacturing represents a huge growing market, both in Nevada 
and throughout this country. We should be encouraging 
innovation in this sector, not stifling it.
    Mr. Chairman, again, thank you for your efforts to bring 
attention to this critical issue, and I will look forward to 
what the witnesses have to say.
    Senator Toomey. Thank you, Senator Heller.
    Let me introduce our witnesses now. First, Bruce Heugel. 
Mr. Heugel is the senior vice president and chief financial 
officer of B. Braun Medical, Inc., which is a medical device, 
surgical, and pharmaceutical company located in Bethlehem, PA.
    Mr. Heugel is a certified public accountant, has a master 
of science degree in management from Purdue University and a 
bachelor of business degree in accounting from the University 
of Toledo, where he graduated magna cum laude. Mr. Heugel, 
thank you for joining us.
    Next is Mr. Quinton Farrar. Mr. Farrar is the founder of 
West Surry Strategies, LLC.
     He currently holds more than 20 patents and has served in 
executive and engineering roles at multiple medical device 
companies, including Genzyme and Smiths Medical. Mr. Farrar 
holds a bachelor of science degree in mechanical engineering 
from Fairleigh Dickinson University and currently resides in 
New Hampshire.
    Third is Alyra Donisvitch. Ms. Donisvitch is currently the 
assistant to the executive director at Maine Centers for Women, 
Work, and Community in Augusta, ME. She also has Type I 
diabetes.
    Finally, Mr. Mark Judge. Mr. Judge is a patient advocate 
near Pittsburgh. He has been diagnosed with colon cancer and 
undergoes chemotherapy and radiation treatments.
    Thank you to all of you for being willing to testify today 
and for joining us today.
    With that, I recognize Mr. Heugel for 5 minutes of 
testimony.

 STATEMENT OF BRUCE A. HEUGEL, SENIOR VICE PRESIDENT AND CHIEF 
     FINANCIAL OFFICER, B. BRAUN OF AMERICA, BETHLEHEM, PA

    Mr. Heugel. Good morning, Chairman Toomey, Ranking Member 
Stabenow, and members of the Senate Finance Committee. I am 
honored, and I appreciate the invitation to appear before you 
to discuss the medical device tax.
    I am Bruce Heugel, the CFO of B. Braun of America. We are 
proud to manufacture and distribute high-quality, safe, 
innovative, and life-saving medical devices and pharma-
solutions that are used for the care of thousands of Americans 
every day.
    In 2013, 79 Senators voted to repeal the tax. A 2015 bill, 
S. 149, to repeal the tax, was introduced by Senators Hatch, 
Klobuchar, Toomey, Casey, and many bipartisan members of the 
Senate. On behalf of our 5,000 American manufacturing 
employees, thank you. We respectfully encourage you to pass the 
bill now.
    We are not alone, because 1,000 organizations, 
associations, and companies representing hundreds of thousands 
of jobs have also requested a repeal of the medical device tax.
    A history of B. Braun of America. In the late 1970s, 
Professor Braun took a chance on America. His 140-year-old 
family medical company rescued a struggling company based in 
Bethlehem. This was good news for the thousands and thousands 
of people who were laid off due to the demise of the former 
industrial giant, Bethlehem Steel. The B. Braun focus on 
innovation, efficiency, and sustainability grew B. Braun of 
America from $6 million in revenue and 300 employees to $1.5 
billion in revenue and 5,000 American employees, truly a 
success story. Bethlehem Steel had over 300,000 employees; now 
they have zero.
    Our plant and office overlook the former Bethlehem Steel 
headquarters building, now an abandoned 20-story monument 
reminding us each day of the cruel realities of global 
competition, job loss, and the importance of sustainability. 
Sustainability is key to our company, B. Braun. We have the 
responsibility to our employees, our shareholders, and our 
community not to end up like Bethlehem Steel.
    So, when the new medical device tax takes away $33 million 
through 2015, we are forced to launch painful countermeasures. 
As a CFO working for 37 years, we follow a simple rule: we 
balance our checkbook, and we do not spend money we do not 
have. The tax is enormous for B. Braun. Our Federal tax bill 
increased by 29 percent, and we are not alone.
    The Federal tax liability for the entire industry has 
increased by 29 percent per the study I reference below, and 
some start-up product lines are not yet profitable, but we pay 
the tax because it is a gross receipts tax, not a tax on 
ability to pay, not a tax on profits. A gross receipts tax is 
just bad tax policy.
    The tax also wipes out 29 percent of the entire United 
States industry's profit. Per the study I reference below, it 
reviewed U.S. medical companies employing 458,000 people. For 
many companies, those profits are typically reinvested into 
developing new products. There is no windfall. Some justify the 
tax anticipating a windfall in new patients. This has not been 
our experience, and studies document that we are not alone. In 
fact, our operating margins have declined in this industry.
    But if there was growth in new patients using our new 
technology, then new Federal taxes would have automatically 
been generated without the new medical device tax, and the new 
tax is generated at the highest corporate income tax in the 
world. Please do not punish our American manufacturing jobs by 
double taxation.
    The industry is cutting back on jobs, people, capital 
spending, research and development, and innovation. It has been 
well documented. The claims are real. In our company, we have 
launched painful countermeasures to balance our checkbook. For 
the first time in history, we did not provide raises for our 
workers. We did it twice. We are not proud of it.
    We cut clinical trials; research; development; capital 
investment; product line expansion; building a new headquarters 
building, campus, and training center; important national sales 
meetings; trade shows; travel; and our pension plan. We cut 
people's pay, we cut the company's share of benefits, we cut 
most budgets.
    We are in a hiring freeze, and new jobs have not been 
created. True, B. Braun has not launched a large workforce 
layoff. We are just hopeful that the tax will be repealed now. 
But our total American medical device workforce is down 200 
through budget reductions. The impact on our employees, on our 
families, is real.
    In closing, thank you, Senators, for listening. On behalf 
of our 5,000 American manufacturing workers and hundreds of 
thousands of jobs in our industry, please repeal the medical 
device tax, and please do it now.
    Thank you.
    Senator Toomey. Thank you, Mr. Heugel.
    [The prepared statement of Mr. Heugel appears in the 
appendix.]
    Senator Toomey. Mr. Farrar?

 STATEMENT OF QUINTON J. FARRAR, PRINCIPAL PARTNER, WEST SURRY 
                   STRATEGIES, LLC, KEENE, NH

    Mr. Farrar. Thank you, Chairman Toomey, Ranking Member 
Stabenow, and members of the Senate Finance Committee, for the 
opportunity to discuss the medical device excise tax's negative 
impact on innovation in the medical technology ecosystem.
    I started in medical device research and development when I 
was a very young man, still in college and looking for a way to 
pay my tuition as I studied mechanical engineering. Little did 
I know that it would be my first step in my life's work 
dedicated to improving patient care and solving complex health 
care-related problems. The first product that I worked on was a 
dialysis system.
    Through hard work, team work, and determination, I am proud 
to report that we built and installed the first central-
delivery bicarbonate-based system in Senator Toomey's hometown 
region of Allentown, PA. That morning, when I woke up and that 
system switched on and I saw the benefits to the patients, I 
was absolutely hooked. The results were amazing.
    From that first innovation, I knew what I was going to do 
with my life, and I was committed to finding better ways to 
treat patients and improve outcomes. I have been very fortunate 
to work on a range of very innovative medical technologies, 
such as developing the first self-contained insulin syringe.
    This device freed diabetics from the need to carry big, 
bulky blister-packaged devices around. Anyone who has a loved 
one who is a diabetic knows just how important this was, and 
this technology is still utilized today in the configuration we 
designed. I have some samples of that first device with me 
here, which I can pass around later.
    I also was part of the team that developed the post-
operative cardiac auto-transfusion. This cutting-edge 
technology allowed patients to receive their own blood 
following heart surgery. It was developed at the very same time 
that HIV was discovered in the blood supply and there were no 
screening tests. Just imagine what this type of technology 
meant to the patients and providers at that very delicate time 
when we first learned about HIV.
    I eventually joined a company called Smiths Medical to help 
expand their line of products and grow innovative platforms. 
The wide range of new products that we worked on there went 
from needle-stick devices to drug delivery pumps with advanced 
medication error prevention systems. In fact, the last product 
that I worked on for Smiths Medical was the Medfusion system, a 
drug delivery device that was shown recently on a ``60 
Minutes'' segment detailing a very promising new clinical study 
being conducted at Duke using polio to treat brain cancer.
    While at Smiths, we were grappling with managing the cost 
of the medical device tax. So, after 10 years at Smiths and 35 
years of my life developing innovative life-saving devices, 
including obtaining more than 20 U.S. patents, my position was 
eliminated.
    Of course, I cannot speak on behalf of Smiths Medical, but 
when the tax went into effect, I saw firsthand the challenges 
that the device tax was placing on our business. I understand 
that 200 other jobs across multiple sites have also been 
eliminated, and they have had to close three manufacturing 
facilities thus far since that tax has been in place.
    All this comes on the heels of the implementation of this 
medical device excise tax. As a person who has been on the 
front lines of making these decisions on how, where, and when 
to make investments with precious R&D resources, I can tell you 
that the single largest costs are to employ the team. Simply 
put, if a company has to save $15, $20 million a year in 
additional expenses, R&D is going to be impacted. Medical 
technology innovators have no choice but to shelve R&D projects 
and move U.S. manufacturing to lower-cost regions to address 
this punitive tax.
    When a huge hurdle such as the medical device tax is put 
before innovators, the net result is what we are all seeing. 
Promising next-generation life-saving, life-changing 
technologies are being shelved or unnecessarily delayed.
    As someone who has led countless teams that have embarked 
on research projects, I know just how critical it is to have 
the proper resources available to take those leaps of faith. 
Oftentimes, quite frankly, we did not know if we would succeed, 
and many times we did not. But as innovators, we charged 
forward with knowledge that our life's work is making big 
differences in the lives of patients across the world. No one 
can ever know the totality of the medical device programs that 
are not getting funded because of this tax. They leave no 
footprint.
    Regrettably, I can assure you that the impact on the future 
quality of care as a result of this device tax is real. We all 
treasure our loved ones, and surely many of us have faced our 
own health scares over the years. Would any of us want to know 
that even $1 that was to be invested in treating the condition 
or disease state that impacted our lives was somehow diverted?
    Finally, I thank the committee and members for the 
opportunity to testify today, and I respectfully ask that the 
Senate take up and pass S. 149, the Medical Device Access and 
Innovation Protection Act, authored by Senators Hatch and 
Klobuchar. Thank you.
    Senator Toomey. Thank you, Mr. Farrar.
    [The prepared statement of Mr. Farrar appears in the 
appendix.]
    Senator Toomey. Ms. Donisvitch?

                STATEMENT OF ALYRA DONISVITCH, 
                    PATIENT, MANCHESTER, ME

    Ms. Donisvitch. Mr. Chairman, Senator Stabenow, and members 
of the committee, thank you for inviting me to testify on this 
very important hearing today.
    My name is Alyra Donisvitch, and I am from Maine, and I am 
absolutely thrilled to be here to share my experience for 
receiving a life-saving medical device by enrolling in an 
Affordable Care Act marketplace health insurance plan.
    I was diagnosed with Type I diabetes when I was 15 months 
old. Type I diabetes is an auto-immune condition. Having Type I 
diabetes means that my body killed my insulin-producing islet 
cells, thinking that they were foreign objects. Now my body no 
longer produces insulin on its own.
    This means that I have to put insulin in my body and 
monitor my blood glucose levels to stay alive. Without good 
blood sugar management, I am at risk of damage to my heart, 
blood vessels, nerves, eyes, and kidneys. Without insulin, I 
would not be able to live.
    When I was growing up, I used insulin injections to treat 
my Type I diabetes. When I was 10, my doctors transferred me to 
an insulin pump. The pump changed my life. I no longer worried 
about the roller coaster that came with being on insulin 
injections, as the insulin pump made the control of my diabetes 
much more accurate and simple to maintain.
    Being able to have such good control of my blood sugars has 
helped me to prevent all of the side effects that normally come 
with this disease. Throughout my childhood there were periods 
when my family did not have insurance. Both of my parents are 
self-employed, and sometimes we could not afford coverage. 
Those times were scary for all of us.
    Luckily, when I was a teenager, my family learned that I 
qualified for Maine's version of Medicaid, called MaineCare. I 
was able to stay on the program until I was 20. When I no 
longer qualified for MaineCare, I struggled to pay for the 
supplies I needed to keep myself alive.
    At that time, I was a full-time college student, and I 
worked two jobs to pay for my medical supplies and living 
expenses. Even though I enrolled in programs to help with the 
costs, they only helped with the cost of insulin; they did not 
cover the expenses related to managing my diabetes. I was 
always worried that something was going to go wrong. There was 
no way I could afford insurance.
    I finally hit a breaking point when the insulin pump I had 
been using for years began to fail and the warranty ran out. I 
looked at different options and found that it would cost over 
$9,000 to get a new pump. I did everything I could to keep my 
insulin pump running. A small crack began to appear near the 
reservoir cartridge. I held it together with nail polish, 
knowing that if the crack opened all the way, the entire pump 
would have died. There were days when I worried I would need to 
drop out of college so I could work and save enough money to 
purchase a new pump. The stress was constant and all-consuming.
    When the Affordable Care Act's new health insurance 
marketplace opened in Maine, I looked for a plan that would 
meet my needs. It was important for me to find something that 
would cover my insulin, a new pump, and my endocrinologist. I 
was fortunate to find a plan, through Maine Community Health 
Options, that only cost $12 each month. I had a $200 deductible 
and a $500 out-of-pocket maximum. Shortly after my plan began 
on January 1, 2014, I used my marketplace insurance to replace 
my insulin pump. I only paid $500.
    I cannot tell you how relieved I was to finally have 
coverage. For the first time since I was on MaineCare, I felt 
like I was in control of my diabetes. Thanks to the Affordable 
Care Act, I was able to finish my undergraduate degree without 
worrying about what might happen. I put the money I saved into 
buying a reliable car and towards paying off my student loan 
debt.
    When I graduated, I was named one of two distinguished 
students at my university. That would not have been possible if 
I had been forced to leave school because of very high medical 
expenses.
    Today, even though I have coverage through an employer-
sponsored health plan, I no longer worry about what will happen 
if my insulin pump stops working or how I will pay for my 
medications. Because of the Affordable Care Act, I take comfort 
in knowing that I do not need to worry about the health 
complications that come with not being able to afford the care 
and medical devices I need to survive.
    The Affordable Care Act has truly been life-changing for 
me. Thank you again for allowing me the opportunity to testify 
today and share my story.
    Senator Toomey. Thank you, Ms. Donisvitch.
    [The prepared statement of Ms. Donisvitch appears in the 
appendix.]
    Senator Toomey. Mr. Judge?

                   STATEMENT OF MARK JUDGE, 
                PATIENT ADVOCATE, PITTSBURGH, PA

    Mr. Judge. Chairman Toomey, Ranking Member Stabenow, and 
members of the Senate Finance Committee, thank you for the 
opportunity to discuss the medical device excise tax's negative 
impact on patients who are suffering from cancer.
    My name is Mark Judge. I am from Pittsburgh, PA, and I have 
stage 4 terminal colon cancer. I was first diagnosed with colon 
cancer in January 2013. I had limited signs or issues as it 
related to cancer, but I had gone to be pre-tested for rotator 
cuff surgery. My primary care doctor noted that my iron level 
in my blood was unusually low, which would lead one to believe 
that somewhere there had been blood leaving the body.
    Since I had no family history of cancer and up to that 
point I had never been sick, she suggested I get a colonoscopy. 
I was 46 at the time, and colonoscopies are not usually done 
until you are at least 50. Thankfully, we agreed to the test, 
and they found a tumor in my colon that was defined as stage 
3B.
    I immediately began 6 weeks of chemotherapy and 6 weeks of 
radiation. During this time, I was admitted to the hospital on 
two occasions with complications. One of these times, I was put 
on a Fentanyl patch, which is, if you are familiar with 
Fentanyl, 20 times more potent than morphine.
    After completing the 6 weeks of chemo and radiation, I had 
resection surgery to remove the tumor in my colon. When I awoke 
from surgery, I was surprised to see that my intestines were 
sticking out of my gut. I had a colostomy bag. I had the bag 
for approximately 3 months, and then I had the reversal surgery 
in August of 2013. The recovery from that is still ongoing. 
They call it a new normal, meaning you are no longer able to go 
to the bathroom the way you used to go. There were times that I 
would have to go 60 to 70 times a day. Basically, I was a 
prisoner of the bathroom for many months.
    During this time, I was deemed NED, no evidence of disease. 
I was scanned every 3 months, and on the second scan the 
doctors discovered some nodules in my lungs. After two 
biopsies, it was discovered that my cancer had metastasized to 
my lungs. The reality is, I was probably stage 4 all along. The 
cancer was always there. I fall into the 20 percent of cases 
where doctors cannot see the cancer in the blood, the way it 
worked out.
    This was March 2014. The average life expectancy I was 
given is 3 years. In April of 2014, after another lung surgery, 
I embarked on 6 months of intense chemotherapy. I was on three 
different chemo drugs. I had surgery to place a port in my 
upper chest so they could administer the chemo and take blood 
easier. In December of 2014, I had my sixth surgery to remove 
the upper right lobe of my lung and to remove two other 
nodules.
    In January of 2015, I again went on the three-chemo 
regimen. I have my seventh surgery scheduled this coming Monday 
to remove two more nodules from my left lung. Obviously, I am 
aware that every time they go into my lungs, they take more and 
more of my lungs out, and at some point I will need oxygen to 
breathe. I will probably be on chemo for the rest of my life.
    I have accepted my situation for what it is. I am very 
thankful for the scans that have prolonged my life to this 
point. If not for them, I would not be here today. I am a 
success story from that standpoint. Unfortunately, many of my 
friends in cancer forums and advocacy groups have not been as 
lucky. Many of them have not had the access to scans, and for 
others it has been too late.
    I am going to continue to fight for my life. I have an 11-
year-old daughter who is my co-pilot in this journey, and I 
will not let her down. I need to see her grow up; I need to see 
her graduate and go on to college. I need to see her become a 
woman. These are not things that she or any child deserves to 
do alone.
    The imaging devices that found this disease cost millions 
of dollars to develop. The additional taxation on these devices 
could prevent many health care providers from purchasing them. 
It also reduces the incentive for companies to invest in 
improving them, so cancer is detected earlier. The trickle-down 
effect is, this stops the innovation of new technologies.
     I can only ask the question, what new technologies are 
there that could save my life and the lives of millions of 
others that are not going to be produced because of this tax? 
That is why I am here today. I cannot see the rationale for 
imposing a tax that will reduce investment in the very life-
saving technologies that I and millions of others rely on and 
hope to see in the future.
    With that, I respectfully ask the Senate to pass S. 149, 
the Medical Device Access and Innovation Protection Act, 
authored by Senators Hatch and Klobuchar. Thank you.
    Senator Toomey. Thank you very much, Mr. Judge. Thank you 
very much for having the courage to come here and to tell this 
very, very painful story. I appreciate it.
    [The prepared statement of Mr. Judge appears in the 
appendix.]
    Senator Toomey. I am going to begin with the questions 
here, and I will keep to the 5-minute clock. I would like to 
start with Mr. Heugel. You touched on this briefly, but I 
wonder if you could elaborate a little bit, Mr. Heugel. The 
question is this: when this tax was being designed and being 
contemplated, it was assumed that most, if not all, health care 
providers, and medical device companies among them, would have 
a huge increase in business.
    This was going to bring people into the conventional health 
care treatments that were not there before. The result would be 
a huge surge in sales. The huge surge in sales would result in 
far greater profitability, and so you could easily afford a tax 
on these sales. I think that was a big part of the rationale, 
this notion that you were going to get a big windfall.
    But it seems that that is not the case with B. Braun, and 
you represent a large, sophisticated medical device company. 
Was it the case that you got a huge windfall from this or was 
it not, and what are your thoughts on that?
    Mr. Heugel. I am glad you asked this question. In our case, 
first of all, I would say that if there was a windfall, it 
would be bad tax policy, because then we are getting taxed 
twice, once on our highest corporate tax rate in the world and 
then, additionally, on a new medical device tax that raises the 
tax rate by 29% for everyone in this industry, per the studies.
    In our case, we were hoping for a windfall, we were hoping 
for a lot of patients, but we have not seen any. In our 
products, there has been no windfall, no bolus of patients 
coming into our industry, so that has not been our experience. 
There are a lot of studies out there that also indicate, in 
different types of medical treatments, there are no new 
patients or no new bolus of new patients, so they never showed 
up.
    Senator Toomey. Thank you, Mr. Heugel.
    Mr. Farrar, you touched on something that I think is really 
important but is difficult, and that is, it is very difficult 
to point to the product that never got invented. It is 
difficult to imagine the enormous benefits that would have 
occurred. You have spent your adult life, basically, in this 
industry.
    If there is a reduction in R&D expenditures by medical 
device companies because their funds are being diverted to this 
tax, how certain are you that we will either see fewer new 
devices, new inventions, or that there will be a delay in the 
time in which they are available to patients?
    Mr. Farrar. Very short answer. First of all, I am 
absolutely certain many leaders in the medical device industry 
have come before this body, very honorable people, including 
Mr. Heugel here, and told you what is going to happen. I see 
firsthand the allocation of funds and investment decisions 
being prioritized toward activities to pay this tax--in other 
words, reducing costs, laying people off--as opposed to 
investing in things with higher risk and longer pay-back. So it 
is absolutely certain that R&D has been, and is continuing to 
be, cut. Again, as I said, leaders of this industry have come 
before you, have predicted what is going to happen, and it is 
in fact happening.
    Senator Toomey. Thank you, Mr. Farrar.
    Mr. Judge, as I understood your testimony, it was some very 
sophisticated medical imaging devices that were able to detect 
the spread of cancer, allow for the treatment of that, far 
earlier than it could have been otherwise detected--as I 
understand it. Is it your view that had you not had access to 
those scanning devices, had they not yet been invented, had 
they not been generally available, that the course of your 
treatment would have been different?
    Mr. Judge. Yes. Flat out, I would not be here today if it 
were not for the medical devices that were used, the PET scans, 
the CAT scans, which I get periodically every 3 months, and 
sometimes more than that depending on my treatments. But I 
would not be here testifying today, so to answer your question: 
without question, medical devices have been pivotal.
    Senator Toomey. Thank you.
    Back to Mr. Heugel. You made the point that if there had 
been a surge in sales, which you never did see--it did not 
occur--but had it occurred, you presumably would have had a 
profit on that portion of sales, and you would have then been 
subject to the highest corporate tax rate in the world. But 
under the medical device law, of course, in addition to that, 
you would have yet another tax on the sales.
    My question is, is it your view that this additional layer 
of tax that we impose on your industry, on top of the highest 
corporate income tax rate in the world, does that discourage 
the attraction of capital by this industry? Does that 
discourage investment in this industry?
    Mr. Heugel. Very good question, Senator. It absolutely 
does. The tax rate is widely broadcasted throughout Europe. 
Last week, I was in Europe at a meeting with 26 different 
country managers. Everyone knows the U.S. tax rate is the 
highest in the world.
    I have attended, where I spoke, an international trade 
event to try to recruit a business to Pennsylvania and the 
United States, and everyone in the audience always raises the 
question, you have the highest corporate tax rate in the world.
    I have the PricewaterhouseCoopers study right here that 
says we have the highest corporate tax rate in the world. We 
also have a Canadian business up in Ottawa, and the good people 
to the north--where it was always at parity at 35 percent--they 
lowered their tax rate from 35 percent to 25 percent. It was so 
successful, they lowered it down to 15 percent and are asking, 
please come back up to Canada.
    Our tax is 133 percent higher than theirs before you add 
the additional medical device tax burden which, per the studies 
by another Big Four firm, says it increases the Federal tax 
burden by 29 percent. So I can tell you, rest assured, from a 
person who has worked in 17 countries and lived in two, 
everyone knows our corporate tax rate is the highest, and it is 
uncompetitive.
    We as a Nation have to be competitive in our technology, in 
our jobs, in what we do in our education. We have to be 
globally competitive in our corporate tax rates, and this does 
not help us at all. A 45-percent effective tax rate is too 
high. Thank you, Senator.
    Senator Toomey. Thank you, Mr. Heugel.
    Senator Stabenow?
    Senator Stabenow. Well, thank you very much to all of you. 
I have lots of questions, actually, for all of you. First, Ms. 
Donisvitch and Mr. Judge, thank you so much for being here. Mr. 
Judge, thank you for sharing such a difficult story, and our 
thoughts and prayers go with you as you struggle going forward 
with this horrible disease.
    I have to start, though, by saying, as somebody who wants 
to fix this, I have to get some facts out here on the record 
just because I think, if we are not careful here, it is going 
to be difficult to fix. We have to fix this based on accuracy.
    First of all, let me just say that we had a debate last 
night about trade, Mr. Heugel. You should have been here. We 
were talking about Bethlehem Steel last night and 
globalization, because we are very concerned about the global 
economy, what is going to happen here as it relates to our 
trade laws, which is a whole different discussion.
    Is it not true that in fact you can deduct the medical 
device tax as an ordinary business expense? There is not double 
taxation here. I just think, as someone who wants to fix this, 
it is very important that there not be misrepresentations. In 
fact, it is deducted as ordinary business expense.
    Mr. Heugel. Thank you, Senator, for raising that question. 
Of course it is deducted as a cost, but it is still double 
taxation.
    Senator Stabenow. I appreciate that. I mean, I appreciate 
what you are saying is double taxation, but, because it is 
deducted, I just think that that is important that we say that.
    Mr. Heugel. May I add----
    Senator Stabenow. Yes. I have limited time, but you are 
welcome----
    Mr. Heugel. All right. Thank you, Senator. Of course it is 
deducted. If you look at the studies I have attached here, the 
average return on sales for the entire industry is 5.3 percent. 
As a result, if you take the medical device tax at 2.3 percent, 
add an effective corporate tax rate of 35 percent and lower it 
to 1.5 percent, you take 1.5 divided by the 5.3, and you have a 
huge tax increase of 29 percent for the entire industry, 
representing 458,000 workers.
    Senator Stabenow. I appreciate that. I appreciate all the 
numbers. We are going through tax reform, and there is a 
broader issue that we need to address in tax reform. I also 
think that we have a medical device industry that is thriving 
in America. It would be very unfortunate to have the word go 
out that somehow this is an industry falling apart. That is 
certainly not true in Michigan.
    In fact, it is important to say that--because this has to 
be credible if we are going to get this fixed--even in your own 
annual statement in 2013, the company said that continued 
growth is predicted for the U.S. health care market. In fact, 
when you say that you got no new customers, you got two of them 
sitting right here, two new customers as a result of the 
Affordable Care Act.
    So, yes, we want to fix this, we want to do something that 
is fair. But I have to say that when we look at, even in your 
own instance, a $5.9-billion revenue increase, 2014 gained 5 
percent from the year before, and there is projected growth in 
2015 of 4 to 6 percent.
    Certainly in Michigan and across the country, we are seeing 
growth. I just think we need to make sure that we support the 
industry by tackling, not just a 2.3-percent tax, but a whole 
range of things that we need to do to support innovation and to 
support growth in terms of other issues as well. And it is 
important to say that, according to a respected tax economist, 
Marty Sullivan, U.S. medical device companies are paying an 
average effective tax rate of about 7 percentage points lower 
than foreign competitors.
    So I am not saying our tax rates on paper are not higher, 
but the effective rate is different. So again, when we go to 
what is competitive and where we need to do those things to be 
supportive, we just need to make sure that we are really 
sharing the same numbers here as we fix this.
    So I want to make sure that what we are doing makes sense, 
but I think it is important also that people understand that we 
have a medical device industry that is growing and innovating 
in America. I hope you are not suggesting that this is going to 
devastate everything when there are so many other issues we 
need to work on together to grow the industry.
    So just finally, I know I am out of time, but I do want to 
just say to our two folks here who are your customers, Ms. 
Donisvitch, it is my understanding that for you--I mean, I do 
not know what would have happened if the nail polish had not 
worked. That is a pretty scary thought.
    But I am assuming that at this point, when you look at the 
fact that you are paying $12 a month and $500 instead of $9,000 
for a pump, that for you, making sure what we do does not 
undermine the Affordable Care Act, I assume would be pretty 
important?
    Ms. Donisvitch. Yes, definitely. I mean, without the 
Affordable Care Act for me, in my circumstance, I would not 
have been able to get a new pump, and I do not even want to 
think about what would have happened when the nail polish 
failed, which it would have.
    Senator Stabenow. Thank you. I know I am out of time, but, 
Mr. Judge, I just also want to say that it is my understanding 
right now that, because of your situation, you are also on 
Social Security Disability Insurance and on Medicaid, and we 
certainly understand that situation.
    But, Mr. Chairman, I think that this story is also an 
example of why we need to be very careful about not cutting 
Medicaid. We just saw a budget come through this Senate, and 
one in the House, that would essentially devastate Medicaid, 
eliminating the expansion and making altogether about $1.2 
trillion in cuts in Medicaid and potentially block-granting it 
to the States, as well as cuts in Medicare.
    So, when we look at all of this, I just want to make sure 
that, in the end, we have a thriving industry, but also make 
sure that we are keeping our eye on the prize, which is making 
sure the people here today have access to affordable quality 
health care. Thank you.
    Senator Toomey. Thank you.
    Senator Portman?
    Senator Portman. Thanks very much for holding the hearing. 
Thanks for the testimony, some of which was very emotional, and 
some of which was very important information we need to have to 
be able to understand how to help our medical device companies 
deal with what is already a very competitive global 
marketplace.
    Clearly, the combination of our tax structure that is not 
working and then this additional excise tax, which typically is 
something you put on things like cigarettes and alcohol--so-
called ``sin taxes''--is something that we have to deal with.
    I am for eliminating it, because I see in my home State of 
Ohio the impact it has had. I have had the opportunity to visit 
a lot of medical device companies, and I plead with them to 
show me their books, and sometimes they do. What has happened 
is two things. One, companies in Ohio have been forced, because 
of the bottom line, to lay people off. I have looked at some of 
the, again, specifics of some of these companies.
    To my colleague from Michigan, talking about how well the 
business is doing in some respects, in some areas of the 
country, I will just tell you, it would be doing a whole lot 
better if you did not have a tax, not on profits, but on 
revenues, that just makes it very difficult to be able to make 
the U.S. industry competitive.
    So the second thing that is happening is, research is being 
cut back. What they tell me is, Rob, what we are going to do 
next year is change our budget for research, because, again, 
our bottom line is not as good because of this tax on our 
revenue. We do not want to lay people off, so we are going to 
try not to, but the only way to do that is to cut back on our 
seed corn, which is our research.
    So it is happening. In my State of Ohio, there are 1,600 
bio-science firms, over 400 focused on medical devices and 
equipment. They leverage an extensive supply chain of over 
2,000 suppliers and service providers.
    Mr. Heugel, I wanted to ask you a couple of questions 
quickly. In your testimony, you describe how B. Braun, similar 
to many companies in Ohio, has seen a decrease in operating 
margins and how the benefit from any new, increasing consumer 
demand for your products would be more than offset by the 
burdens imposed by the medical device tax and other taxes.
    I guess what I would say is, kind of going to this issue of 
research, how does the excise tax, in comparison with other 
taxes, affect your firm's incentive to develop new products and 
do that research that we all want to see happen in order to do 
as Mr. Judge told us so poignantly, come up with these new 
devices to be able to handle some of the toughest diseases?
    Mr. Heugel. Thank you, Senator. That is a good question. 
Basically, it is extra money going away. First of all, we 
balance our checkbook. So, when we add up the total budgets for 
our $1.5 billion company and recognize that we are going to 
have to pay, over this 3-year period, $33 million to balance 
our checkbook, we are forced with hard decisions.
    That is why you see a lot of firms in Ohio and everywhere 
that are making those hard decisions. You will many times cut 
your clinical trials, cut your research and development, and 
cut a lot of your future. Why? Because you will not get paid, 
or those monies will not make a return to pay for those 
investments until 5 years, 8 years, 10 years, or longer.
    So it is just basically that simple. We take the checkbook, 
see the cost increases due to the new tax, so therefore we have 
to reduce a cost from other parts of the business. That is why 
you see in my testimony all the cuts that we made. Thank you.
    Senator Portman. Mr. Farrar, you seem to have an interest 
in answering that question about research, too.
    Mr. Farrar. Yes. As Mr. Heugel said, R&D is sometimes--and 
you used the term ``seed corn.'' It is viewed as discretionary 
and does not affect the immediate production of product and 
operations, and therefore, when you are under pressure like 
this, it tends to be the first thing that is deferred, because 
it is viewed as discretionary, future standard of living.
    The other thing, why it is a tax on innovation, is because 
it is a dollar-one tax. It starts on the first dollar, and many 
new products lack scale efficiency in their early days. They 
cost more money, as my colleague just alluded to, with clinical 
studies to support them. To build on patient advocacy and those 
sorts of things, it costs more at the beginning, and therefore 
the returns are less, and it particularly affects new products 
and new initiatives, so you do less of them. That is the simple 
fact of how an excise tax works: it discourages investment.
    Senator Portman. So, Ms. Donisvitch, you talked about your 
experience; Mr. Judge, you talked about yours. I mean, what I 
am hearing from the companies in Ohio, and I think what I am 
hearing from you all today, is that part of the problem with 
the device tax being on revenue is that, not only do you have 
less research, as you say, things that are discretionary tend 
to go first, but also it just takes longer for the products or 
the technology to get to the patient so that some of these 
lifesaving devices are not going to be there in a timely way.
    Can the two of you talk a little about that, in your 
experience: what difference it would have made to you not to 
have had the devices that you were able to take advantage of, 
and any information you have on sort of this time frame of how 
long it takes to go from the development stage to having 
something be available that can be used.
    Ms. Donisvitch. I mean, as far as the tax goes, I am not 
familiar with all of that.
    Senator Portman. Yes.
    Ms. Donisvitch. I mean, the insulin pump that I have is 
made by Tandem, and I do not know anything about that. I mean, 
I am glad I was able to get the insulin pump. I think what I 
would bring it back to is, if I did not have health insurance, 
I would not have been able to get it in the first place, so 
what is the point about making something, if it is not 
affordable for the consumer? So figure out the tax whichever 
way you want to, just please make sure that these devices are 
accessible and affordable for us.
    Senator Portman. Accessible. Yes.
    Ms. Donisvitch. That is what makes a difference to me.
    Senator Portman. Yes.
    Mr. Judge, any thoughts on that?
    Mr. Judge. Yes. Just to piggy-back on what Ms. Donisvitch 
said: without the scans, my doctors and myself would not have 
had any idea what was going on inside of me. As I mentioned to 
Senator Toomey, I would not be here today if I did not have 
those initial scans. In order for me to combat this, I need 
scans periodically.
    Without the new technology, which is the PET scans and the 
CT scans--because I have cancer in there, but PET scans can 
only see the cancer at a certain size. It emits heat, so we 
want to get it as early as we can, because it is more 
affordable in the long term, but also for my sake, it will save 
my life. So that is basically where I am with that.
    Senator Portman. Yes. Thanks. My time has expired. I would 
just say, this is an economic issue, it is a tax issue, and it 
is also obviously a very personal issue, not just for the two 
of you, but for our constituents, so many of whom rely on 
America being at this cutting edge on providing these new 
innovations and devices and technologies. So we hope that the 
combination of coming up with a better solution here and our 
overall climate in this country, will allow us to continue to 
take the lead.
    Thank you, Mr. Chairman.
    Senator Toomey. I have to apologize to my colleagues. I did 
not realize that Senator Grassley had checked in, so I should 
have recognized Senator Grassley before Senator Portman. Let me 
recognize Senator Grassley now.
    Senator Grassley. I am not going to ask any questions, but 
I was chairing the Judiciary Committee and I wanted to show my 
support for this issue. I think a little bit of history is very 
important to understanding why this punitive tax was put on. 
This branch of medicine did not kowtow to the White House like 
the American Hospital Association or the pharmaceutical 
industry. This is a punitive tax just because they did not cave 
in.
    Also, some of the history is, this tax would have been 
taken off last June. We had a bipartisan group, enough to 
override a presidential veto, with that many Democrats who were 
willing to support it. When this was going to pass, along with 
the pipeline bill, then the extenders tax bill was taken down 
by Senator Reid. He said, ``We are not going to do that until 
after the election.'' So we have the support to get this 
passed, and I just want everybody to know that we ought to get 
it passed.
    I associate myself with the remarks about the bad economic, 
as well as medical, impact this has had on the delivery of 
medicine. Many of us pointed out the flaws in this tax during 
consideration of Obamacare in 2009. At that time, the 
nonpartisan Joint Committee on Taxation was telling us that 
this tax would ultimately hit consumers of their products.
    Our colleagues on the other side could not be bothered by a 
nonpartisan analysis and marched ahead with enacting a fatally 
flawed health reform legislation. We are now left with the 
consequences of this tax, and that is what is being discussed 
here. It has negatively impacted everyone, from manufacturers 
to small business people to patients, and it is time to repeal 
this tax once and for all.
    I yield.
    Senator Toomey. Thank you, Senator Grassley.
    Senator Scott?
    Senator Scott. Thank you, Mr. Chairman. Thank you to the 
panel for taking your time and investing your energies on 
illuminating such an important issue. This really is an issue 
about people, not products. I think, Mr. Heugel, your comments 
and your response to the question of deductibility of the tax--
your numbers were quick, 5.3, 2.3, 35 percent, 1.5, 29 percent, 
so most folks probably did not have a chance to allow those 
numbers to get traction.
    But let us just say it slower and differently so that we 
can help ourselves understand and appreciate what we are 
talking about. I am going to just give you a scenario, and 
please, let me know if I am right or wrong.
    In order for the business to deduct something, you have to 
make something. So far, so good?
    Mr. Heugel. Yes.
    Senator Scott. All right. So if you make, at the end of the 
day, an 8-percent profit and you are going to take, not 2 
percent of the profit, but 2.3 percent of the revenues 
generated to pay down your liability to the government, that 
8.5-percent profit is slashed by about 29 percent.
    Mr. Heugel. Yes, sir.
    Senator Scott. So if you are taking that 29 percent and 
giving it to the government for some purpose, you probably 
cannot take that same 29 percent and use it for R&D.
    Mr. Heugel. Yes, sir.
    Senator Scott. If you cannot use it for R&D, the chances 
are innovation at the highest level will probably not happen.
    Mr. Heugel. You get it.
    Senator Scott. So the two folks to your left--not your 
immediate left, but beyond Mr. Farrar--are benefitting from the 
innovation and the creativity in an industry that is allowed to 
take the seed corn, the profit, or the revenue and reinvest 
that revenue in such a way that you actually are able to have 
more life-saving devices available on the market. As Ms. 
Donisvitch said, they have to be affordable to the consumer. Am 
I on the same page?
    Mr. Heugel. Yes, sir.
    Senator Scott. Sometimes we complicate the matter. If we do 
not appreciate and understand the absolute impact of paying a 
tax on gross revenues that then has to be translated out of the 
net profit, we do not necessarily understand the economic 
impact, not just on your company, but on an industry's ability 
to provide life-saving devices that are desperately needed. Of 
course, the industry is growing because people are living 
longer, because the medical devices are actually working. That 
does not necessarily make them less expensive, but it makes 
them more important, more valuable to all of us who want to see 
our friends and family members and neighbors live longer, 
healthier lives.
    I think the stories that we have heard today are compelling 
stories. I have one at home in South Carolina where a lady 
named Kim Neal, who was diagnosed and then was victorious over 
breast cancer in 2006, decided to launch a small business, a 
small medical device business. She started seeing profits come 
in, she started doing pretty well. She thought--my words, not 
hers--the revenues that were coming in were not always profits, 
but they looked good when you were cashing the checks. You 
realize very quickly that you have to pay all your expenses, 
and you are left with what they call the bottom line. But 
unfortunately, the 2.3-percent tax eviscerated the bottom line, 
and it continues to do so.
    So here you have a champion of champions, a breast cancer 
survivor, starting a medical device company, doing what she is 
passionate about doing, and the health care law starts, not to 
chip away, but to eliminate her seed capital to reinvest in 
such a way that she cannot innovate and create. This tax for 
other companies in South Carolina, smaller companies that have 
35 employees, is in the range of $200,000 off the bottom line.
    Now, Ms. Neal pays--in addition to the onerous tax burdens 
on the local level, the county level, the State level, the 
Federal level, and now the tax on medical devices--her own 
health care cost through Obamacare, which is $1,000 a month. 
She finds herself a little disillusioned by our political 
conversations about ``just a 2.3-percent tax.'' It is not a 
2.3-percent tax, it is a 29 percent, on average, elimination of 
resources to innovate, to create, and to extend the lives of 
Americans.
    Have I missed something here?
    Mr. Heugel. You have not, Senator.
    Senator Scott. Mr. Farrar?
    Mr. Farrar. Very well said, sir.
    Senator Scott. I think we should make this about what it 
really is about: two people who are alive, who are experiencing 
a higher quality of life, because of the innovation and the 
creativity of an innovative sector of our economy.
    We should also realize that, if we are going to do the 
right thing--and Obamacare was supposed to cost $1.8 trillion; 
the latest number is down to $1.3 trillion, which is a drop of 
half a trillion dollars--I think we could figure out $29 
billion.
    Thank you, Mr. Chairman.
    Senator Toomey. Thank you, Senator Scott.
    I want to thank our witnesses for being very patient. We 
have been here for over an hour now. But I do have just a 
couple of quick follow-up questions, and I know Senator 
Stabenow does as well, so I hope you will be patient for just a 
little bit longer and be willing to share your time for a 
little bit longer.
    Senator Stabenow raised, I think, a completely valid and 
important technical question about how this tax interacts with 
other taxes, and specifically she raised the question of 
whether the medical device tax is deductible from one's income 
for the purpose of determining one's income tax. My 
understanding is that, in fact it is deductible, and I think 
Mr. Heugel confirmed that.
    So I have two questions. Mr. Heugel, despite the fact that 
the medical device tax is deductible for Federal income tax 
purposes, is it still the case that the net effect of the 
combination of the deductible medical device tax and the 
ordinary income taxes is still a huge tax increase over where 
taxes were prior to the imposition of the medical device act, 
number one?
    Number two, I know this does not apply to your company, but 
you are an accountant and a CFO, and I am quite sure you know 
the answer to this. If a company is operating on a very narrow 
margin, say less than 2.3 percent, prior to the imposition of 
the medical device tax, is it not the case that the imposition 
of the tax could drive that company from a modestly profitable 
to a loss-making company in time, the very survival of which 
would be threatened? So those are my two follow-up questions 
for Mr. Heugel.
    Mr. Heugel. Thank you, Senator. Those are good questions.
    On the first question, I would refer to some of the studies 
that I referred to, because those are Big Four accounting 
firms. They studied the entire industry, so I quote where they 
said that, for the entire industry, the tax liability was 
raised by 29 percent.
    Then I will refer to the study, also by the same public 
accounting firm, where they looked at all companies in the 
United States, 458,800 employees. I can show you the documents 
where they refer to what is the average industrial profit. That 
is where the ROS comes in, so you can do the calculations. So, 
the tax deductibility has already been factored into the last 
study that I referred to.
    As far as 2.3 percent wiping out some start-ups, yes, I 
know of a couple of companies. We looked at them because they 
never had it in their long-term business model. They never had 
it in their long-term business model when they started their 
R&D. They never had it in their long-term business model when 
they tried to get FDA approval. They never had it in this 
business model when they tried to build a plant.
    Now they get this new tax of 2.3 percent on gross, and one 
company I know is bankrupt. So it is a very devastating tax, 
because it delays the break-even. As a financial advisor to 
companies, I will say, ``Put your money in the stock market; do 
not invest in this technology.''
    We have some technologies where we have invested over $100 
million, $150 million 9 years ago, and we have not sold one 
because it takes so long. So, when you are paying tax on your 
gross revenues, it just makes it not a good economic decision. 
Thank you.
    Senator Toomey. Senator Stabenow?
    Senator Stabenow. Thanks very much.
    I wanted to ask, Mr. Farrar, as an inventor and innovator 
yourself, I know you look at a lot of different ways to try to 
solve problems. That is really the business that you are in. I 
wonder when we look at the best approach to take in terms of 
the medical device tax or if there is a way--you talked a lot 
about the structure of this.
    Is there another way to approach this in terms of the 
medical device industry being part of the Affordable Care Act, 
or is there another structure that you suggest? I am just 
curious if there is another approach.
    Mr. Farrar. So, first of all, thank you for the question, 
Senator. I am a mechanical engineer by training, and I have to 
defer to others on tax policy. I do not even do my own income 
taxes. So first of all, I think, as has been well discussed 
here today, an excise tax on sales is not a good idea. I think 
we all agree in a bipartisan way that discouraging innovation 
in the medical device industry is not a good idea.
    So in terms of alternatives, I am not in a position where I 
can offer comprehensive tax advice to the Senate Finance 
Committee. I wish I could.
    Senator Stabenow. I appreciate that. Yes, I appreciate 
that.
    Mr. Heugel, as someone more in the tax realm, we are 
looking broadly at tax reform. We are looking at a whole range 
of things--of course, the R&D tax credit, which I believe needs 
to be made permanent. I think we have bipartisan support for 
that as well. I mean, I think it is important as we look at all 
this, where are the pressure points, and how do we put this 
together right?
    But, in your perspective, is there any different way to 
structure this or a way to do this that is not going to add to 
the deficit so that as we are struggling--as a Budget Committee 
person, I also am in many, many meetings right now where we are 
trying to figure out how not to add to the national deficit. 
So, any creative ideas?
    Mr. Heugel. Thank you, Senator. That is a very good and 
challenging question. I would look at it this way, since you 
asked for my advice. One of the things about the Affordable 
Care Act, as you have said, is it has provided people with more 
care.
    I would sleep at night knowing that if there is more care 
out there, that those companies providing that care would 
already be taxed at the highest corporate tax rate in the 
world. So you can balance that by saying, if there is more 
patient care, this is a good thing because we are going to get 
more tax revenues.
    In addition, I would look at it that the companies have two 
options. They either can try to pass it on, and we were really 
unsuccessful. We have long-term contracts. In fact, over 50 
percent of our contracts are longer than 4 years. Over 15 
percent are 7-year contracts. So we are unable to do that. But 
either (1), companies can do that, or they have to lay off 
people.
    So I think I would rest at night peacefully knowing that I 
will prevent some layoffs, and that preventing layoffs will 
help the economy because it will mean jobs, and it will mean 
paying payroll tax, income tax, and what have you. In addition, 
I would recognize that if companies are successful in passing 
the expense on, and some of them are, you know what that does? 
That just increases the cost of health care, which is not what 
I think our policy is all about. We do not want to increase the 
of cost health care, so that is what I would say. Thank you.
    Senator Stabenow. Thank you.
    I would just ask, Mr. Heugel, do you support having more 
coverage in the Affordable Care Act, just without the tax? Let 
us say you take the tax away.
    Mr. Heugel. I am a firm believer in health care coverage 
for the American people.
    Senator Stabenow. Thank you very much.
    Mr. Farrar, how would you respond to that?
    Mr. Farrar. Yes. So I think there are a lot of good things 
in the Affordable Care Act. There has also been a lot of 
discussion about things that could be improved upon. So I am 
generally in favor of care for folks, but this bill has some 
flaws that we already talked about, and I would like to see 
those fixed, starting with the medical device tax, of course.
    Senator Stabenow. Of course, yes. Let me just conclude by 
saying the good news is, the ACA covers medical devices. So 
regardless of what happens, we do have people here who are 
covered now. I just want to thank, in conclusion, Ms. 
Donisvitch. You have been suffering with Type I diabetes for 
some 20-plus years now, and certainly Mr. Judge being diagnosed 
with cancer in 2013, that has to be just a punch in the gut to 
have to deal with all of this that is happening to you.
    But I do want to say for the record that I am very proud of 
the fact that you both have access to affordable health care 
and that you are not being blocked because you have preexisting 
conditions, which would have happened if in fact we did not 
have the Affordable Care Act.
    Ms. Donisvitch, as a woman in the marketplace, you probably 
would have been paying more for insurance if we had not 
guaranteed that that would not happen. And there would be 
annual and lifetime limits on the treatments, Mr. Judge, that 
you would have had, as well as the fact that, if we are not 
careful, people in your situation on Medicaid are going to be 
in a much, much more difficult situation.
    So I appreciate everyone being here, and I appreciate the 
need for us to address this. I also want to make sure that 
folks can afford to buy what are very critical, life-saving 
innovations and products. So, thank you to all of you.
    Senator Toomey. I want to thank you, Senator Stabenow, for 
your cooperation in joining us in this hearing. I am going to 
put you down as someone who is in favor of the Affordable Care 
Act, if I could.
    Senator Stabenow. Yes.
    Senator Toomey. That is an issue on which, broadly 
speaking, we are not in agreement. I am very deeply concerned 
about people losing the plans that they had and that they 
liked, and losing the doctors that they had preferred, the 
costs that have risen, and the general lack of freedom that 
results.
    But, I appreciate the fact that we were able to focus on an 
area where I think there is a lot of agreement, and that is the 
flaws inherent in a tax that is imposed on sales on one 
industry that is such an important industry for our country and 
for the patients who benefit from the products that they 
develop.
    I know you share the view that I have, that we want to 
encourage more innovation, further development of these 
wonderful, life-enhancing and life-saving and life-extending 
products. I know we are going to work together to try to 
achieve that.
    I want to really thank our witnesses for taking the time to 
be here. Mr. Judge, Ms. Donisvitch, Mr. Farrar, and Mr. Heugel, 
your testimony was very, very helpful, and we are all very 
grateful.
    The hearing is adjourned.
    [Whereupon, at 11:28 a.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


                Prepared Statement of Alyra Donisvitch, 
                        Patient, Manchester, ME
    Mr. Chairman, Senator Stabenow, and members of the Committee:

    Thank you for inviting me to testify at this very important hearing 
today. My name is Alyra Donisvitch, I am from Maine and I am absolutely 
thrilled to share my experience of receiving a lifesaving medical 
device by enrolling in an Affordable Care Act marketplace health 
insurance plan.

    I was diagnosed with Type 1 Diabetes when I was 15 months old. Type 
1 Diabetes is an autoimmune condition. Having Type 1 Diabetes means 
that my body killed my insulin producing islet cells thinking they were 
foreign objects, so now my body no longer produces insulin on its own. 
This means that I have to put insulin in my body and monitor my blood 
glucose to stay alive. Without good blood sugar management, I am at 
risk of damage to my heart, blood vessels, nerves, eyes, and kidneys. 
Without insulin, I would not be able to live.

    When I was growing up, I used insulin injections to treat my Type 1 
Diabetes. When I was 10, my doctors transferred me to an insulin pump. 
The pump changed my life--I no longer worried about the roller coaster 
that came with being on insulin injections, as the insulin pump made 
the control of my diabetes much more accurate and simple to maintain. 
Being able to have such good control of my blood sugars has helped me 
to prevent all of the side effects that normally come with this 
disease.

    Throughout my childhood, there were periods where my family did not 
have insurance. Both of my parents are self-employed, and sometimes, we 
couldn't afford coverage. Those times were scary for all of us. 
Luckily, when I was a teenager, my family learned that I qualified for 
Maine's version of Medicaid, MaineCare, and I was able to stay on the 
program until I was 20.

    When I no longer qualified for MaineCare, I struggled to pay for 
the supplies I needed to keep myself alive. At that time, I was a full-
time college student, and I worked two jobs just to pay for my medical 
supplies and living expenses. Even though I enrolled in programs to 
help with the cost, they only helped with the cost of insulin, they 
didn't cover other expenses related to managing my diabetes. I was 
always worried that something was going to go wrong. There was no way I 
could afford insurance.

    I finally hit a breaking point when the insulin pump I had been 
using for years began to fail and the warrantee ran out. I looked at 
different options and found out that it would cost over $9,000 to get a 
new insulin pump. I did everything I could to keep my insulin pump 
running. A small crack began to appear near the reservoir cartridge. I 
held it together with nail polish, knowing that if the crack opened all 
the way, the entire pump would have died.

    There were days where I worried that I would have to drop out of 
college so I could work and save enough money to purchase a new pump. 
The stress was constant and all-consuming.

    When the Affordable Care Act's new health insurance marketplace 
opened in Maine, I looked for a plan that would meet my needs. It was 
important for me to find something that would cover my insulin, a new 
pump, and my endocrinologist. I was fortunate to find a plan through 
Maine Community Health Options that only cost $12 each month. I had a 
$200 deductible and a $500 out of pocket maximum. Shortly after my plan 
began on January 1, 2014, I used my new marketplace insurance to 
replace my insulin pump. I only paid $500.

    I cannot tell you how relieved I was to finally have coverage. For 
the first time since I was on MaineCare, I felt like I was in control 
of my diabetes. Thanks to the Affordable Care Act, I was able to finish 
my undergraduate degree without worrying about what might happen. I put 
the money I saved into buying a reliable car and towards paying off my 
student loan debt. When I graduated, I was named one of two 
Distinguished Students at my University--that would not have been 
possible if I had been forced to leave school because of very high 
medical expenses.

    Today, even though I have coverage through an employer-sponsored 
health insurance plan, I no longer worry about what will happen if my 
insulin pump stops working or about how I'll pay for my medications. 
Because of the Affordable Care Act, I take comfort in knowing that I 
don't need to worry about health complications that come with not being 
able to afford the care and medical device I need to survive. The 
Affordable Care Act has truly been life changing for me.

    Thank you again for allowing me the opportunity to testify today 
and share my story.

                                 ______
                                 
      Prepared Statement of Quinton J. Farrar, Principal Partner, 
                       West Surry Strategies, LLC
    Chairman Toomey, Ranking Member Stabenow, and members of the Senate 
Finance Committee, thank you for the opportunity to discuss the medical 
device excise tax's negative impact on innovation in the medical 
technology ecosystem.

    I started in Medical Device Research and Development when I was 
still in college, working at a company called National Medical Care. It 
began as a way to help pay my tuition as I studied Mechanical 
Engineering.

    Little did I know that it would be the first step of my life's work 
dedicated to improving patient care and solving complex health-related 
problems.

    I started my career developing the first center delivery 
biocarbonate based dialysis system. In those days Acetate was the 
buffer solution used in dialysis. The patient's body has to convert 
acetate, bicarbonate is the body's natural buffer, and in theory would 
be better tolerated but it is not stable in solution for long periods. 
Through hard work and determination, I am proud to report that we built 
and installed the first central delivery bicarbonate system, in Senator 
Toomey's hometown region of Allentown Pennsylvania. The results were 
amazing,

    At that moment, I was hooked. From this point forward, I knew I 
wanted to spend the rest of my life researching and developing better 
ways to treat patients and improve outcomes.

    I had the good fortune of joining a company called Becton Dickson 
and developed the self-contained insulin syringe. This device freed 
diabetics from carry big bulky blister packaged devices. Anyone who has 
a loved one who has diabetes knows just how important this was, and the 
technology today is still utilized in the configuration we designed.

    I then progressed to Pfizer's Hospital Products Group, where over 
the course of 18 years I ran R&D, RA/QA, and Manufacturing Technology 
for the Deknatel Division.

    The first technology we developed was postoperative cardiac 
autotranfusion. This cutting-edge technology allowed you to receive 
your own blood following heart surgery. It was developed at the same 
time HIV was discovered in the blood supply, and there was no screening 
tests yet developed.

    Imagine what this type of technology meant to patients and 
providers at a very delicate time period when we were first learning 
about HIV.

    I always had the entrepreneurial bug, and as a result some 
colleagues and I at this point invested in building a new company, 
Deknatel Snowden-Pencer. Here we developed devices that allowed 
surgeons to make bypass grafts on a beating heart. We also introduced a 
minimally invasive surgical system to allow the harvest of the 
saphenous vein eliminating the need to open fillet of the leg, one of 
the most painful aspects of the recovery from heart surgery.

    I've also spent some of my career creating biomaterials, surgical 
implants to reduce painful adhesions following surgery for colon cancer 
and hernia repair. We applied this technology to orthopedics to provide 
lubrication to arthritic joints, reducing pain and improving mobility.

    About 12 years ago, I joined Smiths Medical to help expand their 
line of products and grow innovative platforms they are proudly known 
for. The wide range of new products ran from needle stick prevention 
devices to drug delivery pumps with advanced medication error 
prevention systems. In fact, the last new product that I worked on for 
Smiths Medical was the Medfusion system, a drug delivery device shown 
in the recent 60 Minutes segment detailing the promising clinical study 
at Duke of using Polio to treat brain cancer.

    Unfortunately, the Medfusion syringe pump was my last new product 
at that company.

    While Smiths Medical was grappling with managing the costs of the 
medical device tax, after more than 10 years at Smiths Medical, with 35 
years of my life developing innovative lifesaving medical devices, 
including obtaining more the 20 U.S. Patents, my position was 
eliminated.

    Of course, I cannot speak on behalf of Smiths Medical, but when the 
tax went into effect, I saw first-hand the challenges the device tax 
was placing on our business. I understand 200 other jobs across 
multiple sites have also been eliminated and they have had to close 
three manufacturing facilities thus far since the tax has been out in 
place.

    All of this comes on the heels of the implementation of the medical 
device excise tax.

    At the facility where I was headquartered, in Keene, New Hampshire, 
they produced safety stick needle technology. Before I left the 
company, we projected we would have to pay $3 million annually on the 
medical device tax. With disposable technology like safety stick 
needles, the business was struggling to make up that revenue.

    As a person who has been on the front lines of making decisions on 
how, where and when to make investments with precious R&D resources, 
the single largest costs are compensation related.

    Simply put, if a company has to save $15-$20M a year due to 
additional expenses, the first thing you might define is discretionary 
spending not directly related to the current product and operating 
income.

    All too often however, R&D is impacted.

    I strongly believe this is why the largest source of lost jobs and 
investments are due to the medical device tax.

    Medical technology innovators have no choice but to shelve R&D 
projects and move U.S. manufacturing to lower cost regions to address 
this punitive tax.

    The tax depletes resources that should be invested in new promising 
cures or new manufacturing technologies. I can assure you firsthand 
that R&D requires significant investment, and long periods of time in 
the ecosystem before possibly ever seeing a return.

    With my experience heading up R&D projects, sadly, I know that the 
billions of dollars this excise tax is diverting from innovators is now 
being taken largely out of compensation in the areas of R&D and U.S. 
manufacturing jobs.

    The medical device tax starts with the first dollar of product 
sales and thus it reduces the incentive for growth investments. This 
effect is the same for every new product investment.

    New innovative products tend to initially lack scale and 
efficiencies. This takes time, requiring cash investments at a higher 
percentage of sales then existing products. There are differences in a 
company's ability to offset the additional loses that the medical 
device tax imposes by siphoning money from other product areas.

    Start-ups and small medical device businesses are particularly at a 
disadvantage as they lack the ability to redeploy operating income to 
offset an excise tax on sales. Put another way, when a huge hurdle such 
as the medical device tax is put before innovators, the net result is 
what you are seeing--cuts to R&D and promising, next generation of 
life-saving and life-changing technologies are now being shelved or 
unnecessarily delayed.

    As someone who has led countless teams that embarked on research 
projects, I know just how critical it is to have the resources to take 
these leaps of faith. Often, quite frankly, we did not know if we would 
succeed. At times, we did not. But as innovators we charge forward with 
the knowledge that our life's work is making monumental differences in 
the lives of patients across the world. By Congress enacting policies 
that drains billions of dollars from American high-tech manufacturing, 
it is no surprise that these difficult choices are being made.

    The medical device excise tax clearly increases the relative 
attractiveness and absolute urgency of large cost reductions programs 
for the base of existing products at the expense of investments in 
growth programs.

    No one can ever know the totality of the medical device programs 
that are not getting funding because of this tax.

    Regrettably, I can assure you that the impact on the future quality 
of care as a result of the device tax is real.

    We all treasure our loved ones, and surely many of us have also 
faced our own health scares over the years. Would any of us want to 
know that even $1 that was to be invested in treating the condition or 
disease state that impacted our lives was diverted?

    What future lifesaving device is not being developed today as a 
result of this excise tax? These difficult investment decisions are 
being made every day. I know we can all agree that reducing investments 
in the U.S. medical device sector is not a good idea. There should be 
no place for policies that reduce incentives for innovation in life 
saving technologies.

    My life's work has been medical device development. I recently 
formed West Surry Strategies, LLC to help other medical device 
companies drive innovation and improve competitiveness. From kidney 
failure to diabetes to heart surgery and much more, I have been blessed 
to play a role in improving outcomes.

    I live in New Hampshire and have spoken with both Senator Ayotte 
and Senator Shaheen and I am proud to say that New Hampshire enjoys bi-
partisan support for the repeal of the medical device tax.

    I respectfully ask that Senate pass S. 149, the Medical Device 
Access and Innovation Protection Act authored by Senators Hatch and 
Klobuchar.

    Thank You.

                                 ______
                                 
              Prepared Statement of Hon. Orrin G. Hatch, 
                        a U.S. Senator From Utah
    Good morning. I first want to thank Senator Toomey for arranging 
this important discussion and for your dedication and leadership in the 
bipartisan effort to repeal the medical device tax. Senator Toomey has 
been a long time partner and champion of fighting this ill-conceived 
tax. I truly appreciate his leadership along with Senators Burr, 
Portman, Coats, Crapo, Isakson, and Scott who have been key to building 
support on this.

    The people of Utah and others that I hear from agree that the 
medical device tax harms American innovation, job growth, and the 
ability to provide innovative medical technologies to patients. Earlier 
this year, I re-introduced bi-partisan legislation to repeal the excise 
tax with 35 co-sponsors. If passed, the Medical Device Access and 
Innovation Protection Act will help ensure that Americans continue to 
have access to innovative, life-saving medical devices.

    A strong medical device industry in the United States is critical 
to improve the health of Americans and the national economy. In the 
U.S., the industry employs over 400,000 American workers and pays about 
$25 billion in salaries. Medical device companies pay salaries that are 
40% more than the national average. The technologies developed by these 
companies increase life expectancy, decrease mortality rates, and 
improve the quality of life for many Americans.

    Although this industry is one of the engines of our economy and 
critical to patient health, President Obama decided to target it by 
implementing an excise tax on medical equipment and devices in 
Obamacare. Like many other provisions in Obamacare, the excise tax will 
ultimately increase the cost of health care for Americans. The Joint 
Committee on Taxation estimates that it will collect about $24 billion 
in taxes over the next 10 years. I have heard that the impact of the 
tax is particularly burdensome on innovative companies whose new 
products are not immediately profitable. As medical device companies 
face increasingly higher costs, some of that cost will inevitably be 
passed on to patients.

    The tax is already having an adverse impact on job creation in the 
United States and harming U.S. competitiveness. 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. The excise tax is 
likely to shift jobs overseas because it weakens the playing field for 
U.S. companies and gives their foreign competitors an unfair advantage 
in the global marketplace for medical devices.

    For these reasons, it is my strong belief that Congress should act 
swiftly to repeal this excise tax to keep health care costs low for 
American patients, protect innovation, and protect American businesses.

    I want to thank our witnesses for appearing today to help discuss 
the impacts of the medical device tax, and I look forward to this 
important discussion.

                                 ______
                                 
Prepared Statement of Bruce A. Heugel, Senior Vice President and Chief 
                 Financial Officer, B. Braun of America
    Good morning. Chairman Toomey and Ranking Member Stabenow and 
members of the Senate Finance Committee, I am honored and I appreciate 
the invitation to appear before you to discuss the medical device tax. 
I am Bruce Heugel the CFO of B. Braun of America.

    We are proud to manufacture and distribute safe, high quality, 
innovative and life saving medical devices and Pharma solutions that 
are used for the care of thousands of American patients every day.

    In March 2013, 79 Senators voted to repeal the medical device tax. 
In January 2015, bill S. 149 to repeal the tax was introduced by 
Senator Hatch, Klobuchar, Toomey, Casey and many other bipartisan 
members of the Senate.

    On behalf of our 5,000 American manufacturing workers we thank you, 
and we respectfully encourage you to pass the bill.

    We are not alone, as 1,000 organizations, associations, companies, 
patients, providers and venture capital firms representing hundreds of 
thousands of medical technology jobs have respectfully requested a 
repeal of the medical device excise tax.\1\
---------------------------------------------------------------------------
    \1\ January 13, 2015--letter to Majority Leader Hon. Mitch 
McConnell, Speaker of the House Hon. John Boehner, Minority Leader Hon. 
Nancy Polosi and Minority Leader Hon. Harry Reid. Letter attached.
---------------------------------------------------------------------------
                     history of b. braun of america
    In late 1970s Professor Braun took a chance on America. His 140 
year old family medical company rescued a struggling company based in 
Bethlehem, Pennsylvania. This was good news as thousands were laid off 
due to the demise of the former industrial giant Bethlehem Steel. The 
B. Braun focus on innovation, efficiency and sustainability, grew B. 
Braun of America from $6 million in revenue and 300 employees to $1.5 
billion in revenue and to 5,000 American employees. A true success 
story.

    Bethlehem Steel had over 300,000 employees. Our plant and office 
looks over the former Bethlehem headquarters building, now an abandoned 
20 story monument reminding us each day of the cruel realities of 
global competition, job loss and the importance of sustainability.

    Sustainability is key to B. Braun. We have responsibility to our 
employees, shareholder and community not to end up like Bethlehem 
Steel. So when the new medical device tax takes away $33,000,000 
through 2015, we are forced to launch painful counter measures. As the 
CFO we follow a simple rule: we balance our check book, and do not 
spend money we do not have.
                              enormous tax
    The tax is enormous for B. Braun. Our Federal Tax bill increased by 
29%.

    We are not alone. The federal tax liability for the entire industry 
increased by 29%, per the study ``Effect of the Medical Device Excise 
Tax on the Federal Tax Liability of the Medical Device Industry.'' \2\
---------------------------------------------------------------------------
    \2\ Effect of the Medical Device Excise Tax on the Federal Tax 
Liability of the Medical Device Industry by Ernst and Young November 
2012, page 1, page 5.

    Some start up product lines are not yet profitable, but we pay the 
tax, because it is a gross receipts tax, not a tax on profits. A gross 
---------------------------------------------------------------------------
receipts tax is bad tax policy.

    The tax also wipes out 29% of the entire U.S. industry profit. Per 
the ``Pulse of the Industry'' study the U.S. Public medical companies 
employ 458,800 and had average profitability in 2013 of only 5.2%.\3\ 
In comparison the new tax is 2.3% or 1.5% after tax (using federal 
statutory rate of 35%). As a result, the tax wipes out 29% of the 
profit for the industry.\4\
---------------------------------------------------------------------------
    \3\ Pulse of the Industry. Medical Technology Report 2015, by Ernst 
and Young, page 35. United States Financial Performance calculated from 
Data $11.4/218.5-5.2%.
    \4\ Calculation: 1.5%/5.2% = 29%.

    And for many companies those profits are typically reinvested into 
developing new products.
                              no wind fall
    Some justify the tax anticipating a windfall in new patients for 
the industry. This has not been our experience. And studies document we 
are not alone. In fact our operating margins are down in the last 2 
years. The major driver of that decline is the tax.

    But if there was a growth in new patients using our medical 
technology, then new federal taxes would automatically be generated, 
even without the new device tax. And the new federal tax generated is 
at the highest corporate income tax rate in the world.\5\
---------------------------------------------------------------------------
    \5\ March 17, 2015 Hatch Statement at Finance Hearing on Building a 
Competitive U.S. International Tax System.

    Please do not punish manufacturing jobs by double taxation.
                        painful counter measures
    The industry is cutting back on jobs, on people costs, capital 
spending, research, development and innovation. It has been well 
documented.

    The claims are real. At my company we have launched painful counter 
measures to balance our checkbook.

    First time in our history we did not provide raises to our workers. 
And we did it twice. We are not proud of it.

    We cut clinical trials.

    We cut research and development.

    We cut capital investment and product line expansion.

    We cut building our new North American headquarters campus and 
training center.

    We cut important National sales meetings, trade shows and travel.

    We cut our pension plan.

    We cut peoples' pay through reductions in deferred compensation.

    We cut company share of benefits forcing our employees to pay more.

    We cut most budgets.

    We are on a hiring freeze, and new jobs have not been created.

    True, B. Braun has not launched a large workforce layoff. We are 
hopeful the tax will be repealed. But our total American medical device 
workforce is down by 200 through budget reductions.

    The impact on our company is real.

    Thank you Senators for listening. On behalf of our 5,000 American 
manufacturing employees, and the hundreds of thousands of jobs in our 
industry, please act to repeal the medical device tax.

                     CONTINUED TESTIMONY NOT SPOKEN

                         no price pass through
    The market for most medical technology is characterized by close 
competition. The highly price competitive nature of the market for 
medical devices is well established. Our customers have market power. 
As a result, raising prices is difficult even in the best 
circumstances. Most contracts between manufacturer and purchaser 
typically have terms of 5 to 7 years. There is no special mechanism to 
immediately pass the medical device tax forward. And when prices are 
negotiated during the bidding process for new contracts, the purchasers 
hold enormous leverage.

    Some studies argue that the tax will be eventually passed on to the 
customer. But these studies assume a marketplace that is dominated by 
demand at the level of the individual patient. Medical devices, 
however, are not generally purchased by individual patients. Rather, 
the buyers are institutions. For our company, the main purchasers are 
GPOs and hospitals. In a highly competitive market such as the one for 
medical devices, these purchasers have the ability to refuse to accept 
price increases. In addition, they can delay or cancel large purchases 
or substitute alternatives.

    Even if you assume a future scenario where the purchasers lack the 
market power discussed above, the end result would simply be to 
increase the cost of medical products and the cost of health care, 
which cannot be anyone's policy goal.
                         globally uncompetitive
    Some say the tax does not unfairly treat U.S. companies as compared 
to foreign companies. I disagree. For one reason, IRS form 720 for 
paying the medical device excise tax can only be completed by U.S. 
companies. Further, as a general notion, companies develop medical 
devices for local markets first then export. U.S. manufacturers 
typically sell a larger portion of their technology in the U.S., 
meaning they are paying more tax than a foreign company whose U.S. 
sales may only represent a small percentage of their overall sales. 
Therefore, the U.S. manufacturer is absorbing a more significant cost 
on their sales.

    I have spoken at numerous international economic development trade 
missions and forums. I have worked in 17 countries and I work for a 
global organization. I have first hand knowledge how the U.S. tax code 
is viewed by the world. The world knows that U.S. corporate tax system 
makes the U.S. uncompetitive. Let's not make it even worse by adding 
another tax, especially on an innovative, important industry like ours.

    Most countries have lowered corporate tax rates to attract business 
and improve global competitiveness. Until recently, Canada, for 
example, was at parity to the U.S. at 35%. Canada then slashed the tax 
rate to 25%. It was so successful the tax was reduced a few years later 
to 15%. The U.S. tax rate is 133% higher than Canada.\6\ Our goal 
should be to make the U.S. more competitive, not less. The tax makes 
the U.S. globally uncompetitive.
---------------------------------------------------------------------------
    \6\ Calculation: 35% (USA)--15% (Canada)/15%.
---------------------------------------------------------------------------
                       about b. braun of america
    B. Braun manufactures and distributes medical devices, surgical 
instruments and Pharma IV solutions. Total revenues are $1.5 billion 
and there are 6,500 employees including 5,000 American employees. Our 
products are safe, high quality, innovative and FDA approved. We 
manufacture 70% of our products in the U.S. for the U.S. We also import 
and distribute, from the B. Braun Melsungen AG family of companies. B. 
Braun Melsungen AG is a 176 year old private family company, 
headquartered in Germany, and is our shareholder. The company's 
continued survival and success is driven by the B. Braun culture of 
innovation, efficiency and sustainability, under the Sharing Expertise 
umbrella.
                                 ______
                                 

                            January 13, 2015

The Honorable Mitch McConnell       The Honorable Harry Reid
Majority Leader                     Minority Leader
United States Senate                United States Senate
The Honorable John Boehner          The Honorable Nancy Pelosi
Speaker of the House                Minority Leader
United States House of 
Representatives                     United States House of 
                                    Representatives

Dear Majority Leader McConnell, Speaker Boehner, Minority Leader Reid 
and Minority Leader Pelosi:

As the 114th Congress begins, we respectfully request that repeal of 
the medical device excise tax be addressed as a top priority. 
Implementation of this excise tax--now estimated to collect 
approximately $25 billion in taxes--is adversely impacting patient care 
and innovation, and will compromise patient access to cutting edge 
medical technologies. The Senate and House have both previously passed 
repeal legislation with strong bipartisan majorities. On behalf of the 
almost 1,000 undersigned organizations, associations, companies, 
patients, providers and venture capital firms representing hundreds of 
thousands medical technology jobs, we ask that you act to repeal the 
medical device tax during this session of Congress.

As you know, the medical device industry is a unique American success 
story--both for patients and our economy. The United States is the 
world leader in manufacturing life-saving and life-enhancing 
treatments, and the industry is an important engine for economic 
growth. The industry employs more than 400,000 workers nationwide; 
generates approximately $25 billion in payroll; pays out salaries that 
are 40 percent more than the national average ($58,000 vs. $42,000); 
and invests nearly $10 billion in research and development (R&D) 
annually. The industry is fueled by innovative companies, the majority 
of which are small businesses with 80 percent of companies having fewer 
than 50 employees and 98 percent with fewer than 500 employees.

Unfortunately, the health care law imposes tens of billions in new 
excise taxes on medical technology companies, which are stifling 
innovation and U.S. competitiveness. The tax is already having an 
adverse impact on R&D investment and job creation, jeopardizing the 
U.S. position as a global leader in medical device innovation. If this 
tax is not repealed, it will continue to force affected companies to 
cut manufacturing operations, research and development, and employment 
levels to recoup the lost earnings due to the tax. It will also 
adversely impact patient access to new and innovative medical 
technologies.

In short, this tax on innovation should be repealed for the following 
three important reasons:

    The tax stifles innovation and has already costs thousands of 
        high-paying jobs. It has increased the effective tax rate for 
        medical technology companies, thereby reducing financial 
        resources that should be used for R&D, clinical trials and 
        investments in manufacturing. The impact is especially hard on 
        smaller companies whose innovations are not immediately 
        profitable.

    The tax imposes an additional heavy burden on U.S. companies 
        already struggling with an uncompetitive tax system and gives 
        their competitors overseas an advantage in the global 
        marketplace for medical devices.

    The tax is not being offset by increased demand for medical 
        devices. In fact, it is important to note that there is no 
        evidence suggesting a device industry ``windfall'' from 
        healthcare reform. Unlike other industries that may benefit 
        from expanded coverage, the majority of device-intensive 
        medical procedures are performed on patients that are older and 
        already have private insurance or Medicare coverage. Where 
        states have dramatically extended health coverage, such as in 
        Massachusetts where they added400,000 new covered lives, there 
        is no evidence of a device ``windfall.''

At a time when the federal government is working to promote investment 
in U.S. industries of the future, it is inconsistent that a tax of this 
magnitude is placed on the medical device industry. We must do all we 
can to encourage and promote research, development, investment and 
innovation. Instead, increased taxes, such as this one on the medical 
device industry, coupled with the increased regulatory uncertainty the 
industry also faces, is leading to further job losses, hindering the 
development of breakthrough treatments and delaying patient access to 
medical technology.

We respectfully request timely action on legislation to repeal this 
over $25 billion excise tax.

 
 
 
.decimal                              Adept-Med International, Inc.
3D Medical Manufacturing, Inc.        Adhezion Biomedical, LLC
3M Healthcare                         ADM Tronics
A-dec                                 Adroit Medical
A.R. Hinkel Company                   Advanced Bionics
Abaxis                                Advanced Circulatory Systems, Inc.
Abbott                                Advanced Medical Technology
                                       Association
Abiomed, Inc.                         Advanced Orthopaedic Solutions
                                       (AOS)
Acacia Research Corporation           Advanced Surgical Instruments
Academy of General Dentistry          Advanced Technology Ventures
Accuitive Medical Ventures            AdvanDx
Accuray Incorporated                  Aegis Surgical
Acelity                               Aerocrine, Inc.
Acertara Acoustic Laboratories, LLC   Aesculap, Inc.
Aciont Inc.                           AescuLight
ACON Laboratories, Inc.                AestheTec, Inc.
ActivaTek Inc.                        Aethlon Medical, Inc.
Active Implants                       AFC Tool
Actus Medical                         Affinity Capital
Acufocus                              Agamatrix, Inc.
Acumen Healthcare Solutions, LLC      Agendia, Inc.
Adagio Medical, Inc.                  Alabama Dental Association
Albright Technologies                 ARC Medical, Inc.
Alcon, A Novartis Group Company       Ardiem Medical, Inc.
Aleeva Medical Inc.                   Argenta Advisors
Align Technology, Inc.                ARIBEX, Inc.
Alkaline Corporation                  Arizona BioIndustry Association
Allvivo Vascular, Inc.                ArKal Medical, Inc.
ALPCO Diagnostics                     ARKRAY
Alphatec Spine, Inc.                  Arteriocyte
Alps South LLC                        ARTHROSURFACE, INCORPORATED
Alta Partners                         Articulinx
ALung Technologies, Inc.              Asante Solutions, Inc.
AlvaMed Inc.                          Aso LLC
Ambio Health                          Aspen Medical Products
Ambu, Inc.                            Aspen Surgical
Amedica Analogic Corp                 Associated Industries of Florida
                                       (AIF)
America's Blood Centers (ABC)         Associated Industries of
                                       Massachusetts
American Academy of Facial Plastic &  (AIM)
Reconstructive Surgery                Associates of Cape Cod, Inc.
American Academy of Pediatric         Astute Medical
 Dentistry
American Academy of Periodontology    AtCor Medical Holdings, Ltd.
American Association of Endodontists  Ativa Medical
American Association of Neurological  ATL Technology Utah
Surgeons                              Atlanta BioMedical Corporation
                                       (ABC)
American Association of Oral and      Atlas Spine, Inc.
Maxillofacial Surgeons                Atos Medical Inc.
American Association of               AtriCure, Inc.
 Orthodontists
American College of Prosthodontists   Atrium Medical Corporation
American College of Radiology         Aurident, Inc.
American Dental Association           Aurora Spine
American IV Products, Inc.            Autonomic Technologies, Inc.
American Society of Cataract and      Auxogyn, Inc.
 Refractive
Surgery                               Avacen MOD Corporation
American Society of Dentist           Avantis Medical Systems, Inc.
Anesthesiologists                     Avedro
American Society of Plastic Surgeons  Avinger
Amsino International, Inc.            Axiobionics
Andersen Products                     Axiom Medical, Inc.
Andover Healthcare                    AxioMed Spine Corporation
Andrew Technologies                   B. Braun Medical, Inc.
Anesthetic Gas Reclamation, LLC       Balchem Corporation
Angel Medical Systems                 Banyan Biomarkers
AngioDynamics                         BAROnova, Inc.
AngioScore Inc.                       BaroSense, Inc.
Anulex Technologies, Inc.             Baxano Surgical, Inc.
AOTI Inc.                             Baxter Healthcare
Apollo Endosurgery                    BayBio
Applied Dexterity, Inc.               BD
Applied Research & Photonics, Inc.    BEACON (Biomedical Engineering
                                       Alliance
Aptus Endosystems, Inc                & Consortium)
Aqueduct Neurosciences, Inc.          Beaver Visitec
Aqueous Biomedical, Inc.              Beckman Coulter
AqueSys, Inc.                         Belmont Instrument Corporation
BeneChill, Inc.                       Cardia Access
Benvenue Medical, Inc.                Cardiac Dimensions, Inc.
Berlin Heart, Inc.                    Cardiac Science
Berman Medical                        CardiacAssist, Inc.
Bio-Rad Laboratories                  CardiAQ Valve Technologies, Inc.
Bioanalytical Systems, Inc.           Cardinal Health
BioBusiness Alliance of Minnesota     Cardinal Scale Manufacturing
 (BBAM)                                Company
BioCardia, Inc.                       CardioCommand, Inc.
BioCare Systems, Inc.                 CardioDx, Inc.
BIOCOM                                CardioFocus, Inc.
Biocompatibles Inc.                   CardioKinetix Inc.
Bioconnect Systems, Inc.              CardioNexus Corporation
BioDerm, Inc.                         Cardiovascular Systems, Inc.
BioElectronics                        CareFusion Corporation
BioFlorida                            Carmell Therapeutics Corporation
BIOforward                            Carrot Medical
BioHouston                            Carticept Medical
BioMedical Life Systems               Cartiva, Inc.
BioMedix                              Case Medical, Inc.
bioMerieux, Inc.                      Catheter Connections, Inc.
Biomet, Inc.                          Cayenne Medical
BioMimetic Therapeutics, Inc.         CEA Medical Manufacturing
Bionix Development Corporation        Celleration
BioOhio                               Center for Medical Device
                                       Innovations
Biophan Technologies, Inc.            Cepheid
BIOSAFE, Inc.                         CeQur
Bioscale                              Cerebrotech Medical Systems
Bioscience Association of Maine       Cerephex Corporation
BioSET, Inc.                          Cerevast Therapeutics, Inc.
Biotest Laboratories, Inc.            Ceterix Orthopaedics
bioTheranostics, Inc.                 Checkpoint Surgical
BIOTRONIK, Inc.                       HIP Solutions LLC
Bioventus LLC                         Christcot Medical Company
Birchwood Labatories Inc.             Cianna medical
Blaze Medical Devices                 Circadiance
Boston Healthcare Associates, Inc.    City Hill Ventures, LLC
Boston Scientific Corporation         CivaTech Oncology
BrainScope Company, Inc.              Claret Medical, Inc.
Breathe Technologies                  Clarity Medical Systems, Inc.
Breg                                  Claro Scientific, LLC
BTE Technologies, Inc.                Clarus Medical, LLC
Business Council of New York State    ClarVista Medical
Busse Hospital Disposables            Clear Ear Inc.
C.R. Bard, Inc.                       Cleveland Medical Devices Inc.
Cadence, Inc.                         Clinical Research Consultants,
                                       Inc.
Caldera Medical, Inc.                 CoAxia, Inc.
California Healthcare Institute       Cochlear
 (CHI)
Canaan Partners                       Cohera Medical, Inc.
Cannuflow Inc.                        Coherex Medical
Cantel Medical Corp.                  Colorado Bioscience Association
                                       (CBSA)
Cantimer, Inc.                        Colorado Dental Association (CDA)
Carbylan Biosurgery, Inc.             Columbus Chamber of Commerce
Command Medical Products, Inc.        Devicix
COMPASS International Innovations     DFine, Inc.
Compression Therapy Concepts          DG Medical
Concert Medical                       diaDexus
Congress of Neurological Surgeons     Digirad
ConMed Corporation                    Direct Flow Medical
CONNECT                               Disposable Instrument Co., Inc.
Consensus Orthopedics, Inc.           DJO Global, Inc.
ConvaTec Inc.                         Domain Associates, L.L.C.
Cook Medical                          Domain Surgical, Inc.
Coombs Medical Device Consulting,     Dynatronics
 Inc.
Core Medical Imaging                  E. Benson Hood Laboratories, Inc.
Corgenix Medical Corporation          EarlySense Inc.
Corin USA Limited                     eCardio Diagnostics
Corindus Vascular Robotics            Echelon Biosciences, Inc.
Corinthian Ophthalmic, Inc.           Echo Therapeutics
Cormatrix                             Edwards Lifesciences
Corventis, Inc.                       EKOS Corporation
COTERA, Inc.                          Electrical Geodesics, Inc.
Council for Affordable Health         Electromed, Inc.
 Coverage
Covalent Medical, Inc.                Elekta
Covidien                              Ellipse Technologies, Inc.
Coy Laboratory Products, Inc.         Ellman International
Creatv MicroTech, Inc.                Emerge Diagnostics, Inc.
Critech Research                      Emergent Medical Partners
Critical Diagnostics                  Emerson Consultants, Inc.
Cryothermic Systems                   Endo Health Solutions, Inc.
CSA Medical, Inc.                     Endo-Therapeutics, Inc.
CurveBeam                             EndoChoice, Inc.
CVRx, Inc.                            EndOclear, LLC
CyberHeart                            EndoGastric Solutions
Cyberonics                            EndoShape, Inc.
Cynosure                              eNeura Therapeutics
Cytori Therapeutics, Inc.             Engineered Medical Systems/
                                       Pulmodyne
CytoSorbents Corporation              Entellus Medical
D & D Video Specialists, Inc.         EnteroMedics, Inc.
D&D Medical, Inc.                     EPIC Research & Diagnostics
D&R Products                          Erchonia Corp.
Dallen Medical                        Essex Woodlands
dataCon Inc.                          eVent Medical
DataPhysics Research, Inc.            Evergreen Medical Technologies
DaVinci Biomedical Research Prod.,    Exact Sciences
 Inc.
De Novo Ventures                      Exactech
DEKA R&D Corp.                        Experien Group
Delcath Systems, Inc.                 ExploraMed Development, LLC
Dental Trade Alliance (DTA)           ExThera Medical Corporation
Denterprise International, Inc.       Eye Care and Cure, Inc.
DERMA SCiENCES, INC.                  Fallbrook Engineering, Inc.
DeRoyal                               FAST Diagnostics
Design Mentor                         FemCap Inc.
Desmoid Tumor Research Foundation     Ferris Mfg. Corp.
Detroit Technical Equipment Company   Fidia Pharma USA Inc.
Figure 8 Surgical                     Halyard Health
Fischer Medical Technologies, Inc.    Harbert Venture Partners
Fisher Wallace Laboratories           Hausmann Industries, Inc.
Fjord Ventures                        Health Industry Distributors
                                       Association
Flexicath, Inc.                       (HIDA)
Flexuspine, Inc.                      Health IT Now Coalition
Flight Medical                        HealthCare Institute of New Jersey
Flocel Inc.                           Healthcare Leadership Council
Florida Manufacturing Extension        HealthpointCapital
 Partnership
(MEP)                                 HeartFlow
Florida Medical Manufacturers'        HeartWare International, Inc.
 Consortium,
Inc.                                  Heidelberg Engineering
ForSight Labs, LLC                    HEPCO MEDICAL LLC
ForSight VISION6, Inc.                Hill-Rom
Fortimedix USA, Inc.                  Hispanic Dental Association (HDA)
FOUNDRY NEWCO XI                      HistoSonics, Inc.
Freedom Meditech, Inc.                HITACHI MEDICAL SYSTEMS
Fresenius Medical Care NA             AMERICA, INC.
Freshmedx                              Holaira
Frontier Scientific Inc.              Hologic
FUJIFILM SonoSite Inc.                Home Dialysis Plus
Fujirebio Diagnostics, Inc.           Hospira Inc.
Functional Fluidics                   HoverTech International
Galil Medical                         HTG Molecular Diagnostics
Galt Medical                          Hull Associates
Gambro                                Hycor Biomedical, Inc.
Gamma Medica Inc.                     Hydrocision
GE Healthcare                         Hygieia, Inc.
Geistlich Pharma North America Inc.   ibiliti
Genesis Plastics Welding              iCAD, Inc.
GENICON                               ICAP Patent Brokerage
Gentis Inc.                           Ichor Medical Systems
Genway Biotech, Inc.                  ICONACY Orthopedic Implants, LLC
Georgia Bio                           ICU Medical, Inc.
Georgia Dental Association            Ikaria, Inc.
GI Dynamics, Inc.                     Illinois Biotechnology Industry
Gilero, LLC                           Organization--iBIO
Glaukos Corporation                   Illinois State Dental Society
Glenveigh Medical                     IlluminOss Medical, Inc.
Globe Composite Solutions, Ltd.       ImaCor
Globus Medical                        IMARC Research
Goodmark Medical, LLC                 Immucor, Inc.
Gradient Technologies, LLC            ImpediMed
Great Lakes NeuroTechnologies Inc.    ImThera Medical, Inc.
Greatbatch, Inc.                      in2being, LLC--Your Medical Device
Gregory, Sharer & Stuart, CPAs        Development Partner
Ground Zero Pharmaceuticals           Incept LLC
GT Urological, LLC                    Indiana Chamber of Commerce
Gulden Opthalmics                     Indiana Dental Association
Haemonetics Corp.                     Indiana Health Industry Forum
Halo Healthcare Inc.                  Indiana Manufacturers Association
HALT Medical, Inc.                    Indiana Medical Device
                                       Manufacturers Council
Infinium Medical                      Laurimed, LLC
InfoBionic                            Lead BioPharma Consulting, LLC
Infraredx, Inc.                       LeukoDx Ltd.
InfraScan, Inc.                       LFI Medical
InjectiMed, Inc.                      Life Science Tennessee
Inogen                                Life Spine, Inc.
inSite Medical Technologies           Life Technologies
Instratek, Inc.                       Lifecore Biomedical, LLC
Insulet Corporation                   LifeScience Alley
Insurance Office of America           LifeScience Plus, Inc.
Insurgical LLC                        LifeWave
Intact Medical Corporation            Lightstone Ventures
Intact Vascular, Inc.                 Linde Healthcare
Integra LifeSciences                  LipoScience, Inc.
Integrated Sensing Systems            LogicMark, LLC
 Incorporated
(ISSYS)                               Logikos, Inc.
Integrity Digital Solutions           Lonestar Heart, Inc.
INTER-LINGUA                          Louisiana Dental Association
International Franchise Association   Luminex Corporation
International Medical Industries,     LuxarCare
 Inc.
International Sterilization           Mack Medical
 Laboratory LLC
Intersect ENT                         MacuCLEAR, Inc.
InterValve, Inc.                      Magellan Technologies, Inc.
Interventional Autonomics             Magnolia Medical Technologies,
 Corporation                           Inc.
Interventional Spine, Inc.            Maine Standards Company, LLC
IntraPace                             Mammotome
IntriCon                              Manufacturers Association of Maine
Intrinsic Therapeutics                Mardil Medical, Inc.
Intuitive Marketing Strategists       MarketLab
Intuity Medical, Inc.                 Masimo
Ionix Medical, Inc.                   Massachusetts Dental Society
Iowa Dental Association               Massachusetts Medical Device
                                       Industry
iRhythm Technologies, Inc.            Council MassMEDIC
Irvine Chamber of Commerce            MassBio
iSonea, Limited                       Materna Medical
ISTO Technologies, Inc.               Mauna Kea Technologies
Ivantis, Inc.                         MB Venture Partners, LLC
Ivenix                                MBio Diagnostics, Inc.
Ivivi Health Sciences LLC             MBL International Corporation
iWalk                                 Mectra Labs Inc.
J.H. Garver Consulting, LLC           MED-EL Corporation
Jabil                                 Medbio, Inc.
Jack Saladow & Associates             MedDx Capital Advisors
Jerichons, LLC                        Medenovo, LLC
Keith & Associates LLC                Medical Device Manufacturers
                                       Association
KFx Medical Corporation                (MDMA)
Kinamed Inc.                          Medical Engineering Innovations,
                                       Inc.
KRONUS, Inc.                          Medical Imaging & Technology
                                       Alliance
Kspine, Inc.                          Medical innovations Intl. Inc.
L. VAD Technology, Inc.               Medical Polymers, Inc.
Laser Peripherals, LLC                Mediclever
MediStim USA, Inc.                    Medigroup, Inc.
MedOne Surgical, Inc.                 Myomo, Inc.
MedShape                              MyoScience
MedTech Association of New York       nanoMAG LLC
MedWaves, Inc.                        nanoMR
Megadyne                              Nasiff Associates Inc.
Menlo Park Associates                 National Association for the
                                       Support of Long
Mercury Medical                       Term Care (NASL)
Merit Medical Systems, Inc.           National Association of
                                       Manufacturers
Metric Medical Devices, Inc.          (NAM)
Metronom Health, Inc.                 National Federation of Independent
                                       Business
Mettler Electronics Corp.             (NFIB)
Mevion Medical Systems, Inc.          Nativis, Inc.
MGC Diagnostics                       Natus Medical Incorporated
Micardia Corporation                  NaviMed Capital
Micell Technologies                   Naviscan, Inc.
MichBio                               NDH Medical
Michigan Dental Association           Nebraska Dental Association
Michigan Life Ventures, LLC           Nelson Laboratories, Inc.
MicroCube                             Neodyne Biosciences
Microline Surgical, Inc.              Neograft Technologies, Inc.
Micronics, Inc.                       NeoMetrics, Inc.
MicroTransponder Inc.                 NeoTract, Inc.
Midmark Corporation                   Neuro Kinetics, Inc.
Mighty Oak Medical                    Neuronetics, Inc.
Millar Instruments, Inc.              NeuroPace
MIM Software Inc.                     NeuroTherm
Minerva Medical                       NeuroTronik
Minnesota Dental Association          NeuroVista Corporation
Minnetronix                           NeuroWave Systems Inc.
Mirabilis Medica, Inc.                NeuWave Medical
Mirador Biomedical                    Nevada Dental Association
Miramar Labs                          Nevro
Mississippi Dental Association        New Enterprise Associates
Missouri Biotechnology Association    New Hampshire Dental Society
MitraGen                              New Jersey Life Sciences Vendors
                                       Alliance
Mitralign, Inc.                       New Leaf Venture Partners
Modulated Imaging, Inc.               NinePoint Medical
Molecular Detection, Inc.             Niveus Medical
Monebo Technologies, Inc.             Nocimed, LLC
Moog Medical Devices                  Non-Invasive Medical Systems
Morgenthaler Ventures                 Nonin Medical
Morris Innovative                     Norris Capital, Inc.
Mound Laser & Photonics Center        North Carolina Biosciences
                                       Organization
MOXI Enterprises, LLC                 North Carolina Dental Society
Moximed                               Nova Biomedical
MPI Research                          NovaSom
MPM Capital                           Novocor Medical Systems
MPR Product Development               NRG
Mustang Medical                       NuMED, Inc.
Mustang Vacuum Systems                NuOrtho Surgical, Inc.
MyoCardioCare, Inc.                   NuVasive
NVCA                                  Nuvimedix LLC
nVision Medical                       Philips Electronics North America
NxStage Medical, Inc.                 Phillips Consulting Group, LLC
NxThera, Inc.                         Phlebotics, Inc.
Nypro Inc.                            PhotoMed Technologies, Inc.
O.E. Meyer Co.                        Physcient, Inc.
Obalon Therapeutics                   Pilgrim Software, Inc.
OBMedical Company                     Pittsburgh Life Sciences
                                       Greenhouse
OCTANe                                Pittsburgh Technology Council
OcuSciences, Inc.                     Pivot Medical Inc.
Ohio Chamber of Commerce              Plasma Technologies, Inc.
Ohio Manufacturers' Association       PlasticsOne
OmniGuide Surgical                    Plexus Corp.
OMNIlife science, Inc.                Portaero
On-X Life Technologies, Inc.          Preceptis Medical, Inc.
Onciomed, Inc.                        Precise-Pak Inc.
OncoHealth                            Pressure Biosciences, Inc. (PBIO)
ONSET Ventures                        Presymtec Medical
Onyx Medical Corporation              Prism Plus Consulting
OPHTEC USA, Inc.                      Prism VentureWorks
OptiScan Biomedical, Inc.             Prizm Medical, Inc.
Orange County Business Council        Pro2Med Inc.
OraSure Technologies, Inc.            ProMedTek
Oraya Therapeutics                    Prosolia, Inc.
Orbital Research Inc.                 Prospect Venture Partners
Orchid Orthopedic Solutions           Prospex Medical
Oregon Bioscience Association         Proteus Biomedical, Inc.
Orlucent                              PuriCore
Ortho Kinematics                      QHeart Medical Inc.
OrthoCor Medical                      Qualcomm Life, Inc.
Orthodontic Manufacturers             QualPro Consulting
 Association
Orthofix International N.V.           Quasar Bio-Tech Inc.
OrthoForge, Inc.                      Quidel Corporation
OrthogenRx, Inc.                      RBC Capital Markets
Orthopaedic Implant Company (OIC)     Redpoint Corporation
OrthoPediatrics Corp                  Regenesis Biomedical, Inc.
OrthoSensor                           Regulatory & Quality Solutions LLC
OrthoWorx                             Reichert Technologies
OsteoMed                              Reimbursement Strategies, LLC
Ostial Corporation                    Relievant Medsystems, Inc.
Ottobock U.S. HealthCare              Research!America
Owens & Minor                         ReShape Medical Inc.
Palo Alto Health Sciences, Inc.       ResMed
Paradigm Spine, LLC                   Respicardia, Inc.
PARAGON MEDICAL, INC                  Respira Therapeutics, Inc.
Pathfinder Therapeutics, Inc.         Respiratory Motion, Inc.
Patient Pocket, LLC                   Respiratory Research, Inc.
Penn-Century, Inc.                    Respiratory Technologies Inc.
Pennsylvania Bio                      Response Biomedical Corp.
Pennsylvania Dental Association       ReVent Medical, Inc.
Penumbra, Inc.                        ReVision Optics, Inc.
Percutaneous Systems, Inc. (PercSys)  Rhythmlink International, LLC
Rinovum Women's Health, Inc.          Richmond Products Inc.
Robomedica, Inc.                      South Carolina Dental Association
                                       (SCDA)
Roche                                 Southeastern Medical Device
                                       Association
Rochester Electro-Medical, Inc.       (SEMDA)
Rodman Media Corp                     Southern California Biomedical
                                       Council
RODO Medical, Inc.                    (SoCalBio)
RoundTable Healthcare Partners        SPE Medical
ROX Medical                           SpectraScience, Inc
Royal Oak Medical Devices, LLC        SpherIngenics, Inc.
RTI Surgical                          Spinal Kinetics
RxFunction, Inc.                      Spinal Modulation, Inc.
s2a molecular, Inc.                   Spinal Ventures, LLC
Safeguard Scientifics, Inc.           Spine Wave, Inc.
SafeShower                            SpineAlign Medical, Inc.
Sakura Finetek USA, Inc.              SpineGuard
Saladax Biomedical, Inc.              Spineology Inc.
Salix Pharmaceuticals, Inc.           Spinofix, Inc
San Diego Regional Chamber of         Spiracur Inc.
 Commerce
SandBox Medical LLC                   Spiration, Inc.
Sanofi                                SPIWay, LLC
SCBIO                                 Split Rock Partners
Scientific Imaginetics                St. Jude Medical
SDRS LLC                              STAAR Surgical Company
Sebacia Inc.                          Stanmore Implants
Second Sight Medical Products, Inc.   STATKING Clinical Services
Sekisui Diagnostics                   STD Med, Inc.
Senseonics                            SteriPack USA, Ltd
Sequent Medical Inc.                  Steris Corporation
SI-BONE, Inc.                         Stimwave
Siemens Healthcare                    Strada Consulting
Sight Sciences Inc.                   Streamline, Inc.
SightLine Partners                    Streck, Inc.
SIGNUS Medical, LLC                   Strohl Medical
Silere Medical Technology, Inc.       Stryker
Silicon Valley Leadership Group       Sunshine Heart
Silver Bullet Therapeutics, Inc.      Surface Solutions Labs, Inc.
Sirtex Medical Inc.                   SurModics, Inc.
Skyline Ventures                      Svelte Medical Systems, Inc.
Small Bone Innovations, Inc.          Swan Valley Medical, Incorporated
Smart Perfusion, LLC                  Sylvan Fiberoptics
Smith & Nephew, Inc.                  Synapse Biomedical, Inc.
Smiths Medical                        Synarc, Inc.
Soft Tissue Regeneration, Inc.        SynCardia Systems, Inc.
Solace Therapeutics                   Synecor, LLC
Solta Medical, Inc.                   Synergy Health plc
Solvonics Medical                     Synergy Life Science Partners
Sonacare Medical                      Syntermed, Inc.
Sonendo, Inc.                         Sysdyne Corporation
Sonitus Medical Inc.                  Sysmex America, Inc.
Sonoma Orthopedics                    Tactile Systems Technology, Inc.
Sorin Group USA, Inc.                 Tandem Diabetes
Sotera Wireless                       Targeson, Inc.
Tarsus Medical Inc.                   Target Discovery, Inc.
TearScience, Inc.                     Urovalve, Inc.
TEI Biosciences Inc.                  USGI Medical, Inc.
TEKNA Manufacturing, LLC              Utah Dental Association
Teleflex Incorporated                 Utah Technology Council
Temptime                              Valeritas, Inc.
Teratech Corporation                  Validation & Compliance Institute
Terumo Cardiovascular Group           Valley Ventures
Terumo Medical                        ValveXchange, Inc.
Tethys Bioscience, Inc.               Vapotherm
Texas Healthcare and Bioscience       Vascular Solutions, Inc.
 Institute
The Eclipse Group                     Vector Resources
The Foundry                           Vector Surgical, LLC
The Innovation Factory                VectraCor, Inc.
The Plastics Industry Trade           Velico Medical, Inc.
 Association (SPI)
The Spectranetics Corporation         Ven-Tel Plastics Corporation
The Tech Council of Maryland          VENITI, Inc.
The Vertical Group                    Venous Health
Theodosiou Consultants, Inc.          Veracyte
Therapeutic Resources, Inc.           Verax Biomedical Incorporated
TheraTogs, Inc.                       Veritomyx, Inc.
Thermo Fisher Scientific              Versant Ventures
Therox                                VertiFlex, Inc.
Thoratec Corporation                  Vertos Medical Inc
Three Arch Partners                   Vesiflo/Personal Med
ThreeWire                             ViaDerm LLC
Thubrikar Aortic Valve, Inc.          Viatronix
TIDI Products                         VIDA Diagnostics
Tissue Regenix USA Inc.               Virginia Biotechnology Association
Titan Spine, LLC                      Virginia Dental Association
Toshiba America Medical Systems,      VirtualScopics, Inc.
 Inc.
Tosoh Bioscience Inc.                 Viscogliosi Bros., LLC
Trademark Medical                     Vision-Sciences, Inc.
Transcend Medical                     VisionCare Ophthalmic Technologies
Transcorp Spine                       Vital Images, Inc.
TransEnterix, Inc.                    Vital Therapies, Inc.
TransMedics, Inc.                     Vital/Med Systems Corporation
Transonic Systems, Inc.               Vitalcor, Inc.
Trillium Diagnostics, LLC             Viveve
Trillium Engineering                  Volcano Corporation
TriReme Medical, Inc.                 VQ OrthoCare
TriVascular, Inc.                     VueTek Scientific, LLC
Twin Star Medical                     W. L. Gore & Associates, Inc.
TYRX, Inc.                            Ware Disposal Inc.
U.S. Chamber of Commerce              Warsaw-Kosciusko County Chamber of
Unilife Medical Solutions             Commerce
Uptake Medical Corporation            Washington Biotechnology &
                                       Biomedical
Uresil                                Association
Urobiologics LLC                      Water Street Healthcare Partners
Urologix, Inc.                        Waters Corporation
Uromedica, Inc.                       WaveTec Vision
Uroplasty, Inc.                       Welch Allyn
Wescor                                Wenzel Spine, Inc.
White Pine Medical, Inc.              Xlumena
Wilson Sonsini Goodrich & Rosati      Yukon Medical
Wisconsin Dental Association          ZELTIQ
Woolfson Eye Institute                Zimmer, Inc.
Wright Medical                        Zoe Medical, Inc.
Wyoming Dental Association            ZOLL Medical
X-Spine                               Zyga Technologies
Zynex
 


                                 ______
                                 
                   Prepared Statement of Mark Judge, 
                    Patient Advocate, Pittsburgh, PA
    Chairman Toomey, Ranking Member Stabenow, and members of the Senate 
Finance Committee, thank you for the opportunity to discuss the medical 
device excise tax's negative impact on patients who are suffering from 
cancer.

    My name is Mark Judge, I'm from Pittsburgh PA, and l have stage 4 
terminal colon cancer.

    I was first diagnosed with colon cancer in January 2013. I had 
limited signs or issues as it related to cancer but I had gone in to be 
pre-tested for rotator cuff surgery. My primary care doctor noted that 
the iron level in my blood was unusually low. Since I had no family 
history of cancer, and up to that point I had never been sick, she 
suggested I get a colonoscopy. I was 46 at the time and colonoscopies 
aren't usually done until you're at least 50. Thankfully, we agreed to 
the test and they found a tumor in my colon that was defined as stage 
3b.

    I immediately began 6 weeks of chemotherapy and 6 weeks of 
radiation. During this time I was admitted to the hospital on two 
occasions with complications. One of these times I was put on a 
fentanyl patch. After completing the 6 weeks of chemo/radiation I had 
resection surgery to remove the tumor in my colon. When I awoke from 
surgery, I was surprised to see that my intestines were sticking out of 
my gut. I was to have a colostomy bag. I had the bag for approximately 
3 months then I had reversal surgery in August of 2013. The recovery 
from that is still ongoing. They call it a new normal, meaning you're 
no longer able to go to the bathroom they way you used to go. There 
were times that I would have to go 60-70 times a day. Basically I was a 
prisoner of my bathroom for many months. During this time I was deemed 
NED (``no evidence of disease''). I was scanned every 3 months and on 
the second scan, the doctors discovered some nodules in my lungs. After 
two biopsies it was discovered that my cancer had metastasized to my 
lungs. The reality was I probably had stage 4 all along. The cancer was 
always there. I fall into the 20% of cases where doctors cannot see the 
cancer in my blood. This was March 2014 and the average life expectancy 
I was given is 3 years.

    In April 2014, after another lung surgery, I embarked on 6 months 
of intense chemotherapy. I was on three different chemo drugs. I had 
surgery to place a port in my upper chest so that they can administer 
the chemo and take blood easier. In December of 2014 I had my sixth 
surgery to remove the upper right lobe of my lung and to remove two 
other nodules. In January of 2015, I again went on the three chemo 
regimen. I have my seventh surgery scheduled this coming Monday to 
remove two more nodules from my left lung. Obviously, I'm aware that 
every time they go into my lungs they take more and more of my lungs 
out and at some point I'll need oxygen to breath. I'll probably be on 
chemo the rest of my life.

    I've accepted my situation for what it is. I'm very thankful for 
the scans that have prolonged my life to this point. If not for them I 
wouldn't be here today. I am a success story from that standpoint. 
Unfortunately, many of my friends on the cancer forums and advocacy 
groups have not been as lucky. Many of them haven't had access to scans 
and for others it was too late.

    I'm going to continue to fight for my life. I have an 11 year old 
daughter Elly who is my co-pilot in this journey and I will not let her 
down. I need to see her grow up. I need to see her graduate and go on 
to college. I need to see her become a woman. These are not things that 
she or any child deserves to do alone.

    The imaging devices that found this disease cost millions of 
dollars to develop. The additional taxation on these devices could 
prevent many health care providers from purchasing them. It also 
reduces the incentive for companies to invest in improving them so 
cancer is detected earlier. The trickle-down effect is that this stops 
the innovation of new technologies. I can only ask the question: What 
new technologies are there--that could save my life and the lives of 
millions of others--that are not being produced because of this tax?

    That is why I am here today. I cannot see the rationale for 
imposing a tax that will reduce investment in the very life-saving 
technologies that I, and millions of others, rely upon, and hope to see 
in the future. With that, I respectfully ask the Senate to pass S. 149, 
the Medical Device Access and Innovation Protection Act, authored by 
Senators Hatch and Klobuchar. Thank You.

                                 ______
                                 
             Prepared Statement of Hon. Patrick J. Toomey, 
                    a U.S. Senator From Pennsylvania
    Welcome, Ladies and Gentlemen; the Senate Finance Subcommittee on 
Health Care will now come to order.

    First of all I want to thank Senator Hatch for encouraging us to 
begin this process of exploring the Medical Device Tax with this 
hearing. I want to thank Ranking Member Stabenow for all of her 
leadership on healthcare issues generally and her interest in exploring 
this topic as well. And I am very grateful to our witnesses for taking 
the time and in some cases traveling a considerable distance to be with 
us to share their expertise and their perspective on a really important 
issue.

    So, I will make no bones about it. My strong preference would be to 
have a full and permanent and complete repeal of the medical device 
tax, because it's my view that this tax is doing considerable harm--
economic harm. I am concerned about the impact that is has on 
innovation in the medical device industry. And I am really concerned 
about the impact it has on individual patients--current patients and 
future patients. So we'll discuss this.

    I want to start with just a little illustration of some of the 
absolutely wondrous things that are being invented and develop in this 
space. I have in my hand, if you can see this, a ventricular assist 
device. This is a mechanical heart pump for those with congestive heart 
failure. This has kept 7,000 Americans alive while they await a 
transplant. 300,000 people die every year in our country from heart 
failure. It took 5 years to get the FDA approval for this. The company, 
HeartWare, that developed this product spent $200 million on research 
and development over the first 5 years of their existence as an 
American company and they racked up $112 million of losses before they 
ever were able to begin to turn a profit, but think of the of lives 
that were saved by virtue of this remarkable invention. Here we have a 
spinal implant--for those who aren't close enough to see, it looks 
remarkably like a vertebrae, but it clearly is not--it's used to mend 
bone fractures, this material is, this is an alternative for over 
400,000 people annually who have spinal fusion surgery to deal with 
severe and chronic pain in the lower back. It's made by a company 
called Synthes. The company employs hundreds of people in my state of 
Pennsylvania, in West Chester. And last, this is a vagal nerve 
stimulator. This is implanted in the chest, surgically implanted, this 
very device. And it sends an electrical current to the patient's brain 
and it treats epilepsy. And it treats treatment resistant depression. 
Millions of Americans suffer from each of those maladies. And the 
company that makes this also experienced, as so many startup companies 
in the medical device space do, losses for years as they were in the 
stages of developing the product and bringing it to market and getting 
the approvals. In fact, they incurred $250 million in losses before 
they were able to turn around and sadly the CEO has announced that, in 
part to offset the costs of the medical device tax, they're going to 
build their next factory in Cost Rica rather than the United States. 
And this is one of the big concerns; one of the big concerns is that 
this tax on sales is going to threaten America's global leadership in 
this space.

    The medical device industry is a huge economic contributor, not 
just in my state of Pennsylvania, but across the country. The range of 
products is stunning, from pacemakers to orthodontics, hearing 
implants, surgical tools, knee braces, joint replacements. The industry 
employs over 400,000 people directly. There are another 2 million 
people that are indirectly employed because they vendors are supplier 
companies to the medical device industry.

    And interestingly--you know we had a big debate yesterday about 
trade policy as Ranking Member Stabenow knows very well--the medical 
device industry for the last 5 years has run a substantial trade 
surplus. Because we are the leaders in the world, we make the best 
products, and we sell them all around the world, we've had a trade 
surplus on average over the last 5 years. And so it's a big, it's an 
innovative, it's a dynamic industry. It pays good wages, above the 
averages. It improves the quality of our lives through the products 
that it makes. And so, it's really important, I think, to all of us 
that this industry thrives.

    My view is that the tax, the Medical Device Tax, is not only 
onerous on its scale, but it's bad in its design. It is a tax on sales, 
not on a tax on profits. And so these companies that I alluded to that 
spent large sums of money making these product and bringing them to 
market, they were losing money years, even when they started to have 
sales. The initial sales those years were not enough to be profitable. 
To impose a tax on those sales prior to there even being a profit, it 
just adds to the debt load that these companies have to carry. And 
there is only so much debt that can be financed. This is one of the 
concerns that I have. The design of this tax is very very unfortunate.

    I think we're going to here from some of the witnesses that this 
has cost us jobs across the country already. Some companies have had to 
cancel plans to expand. Others are looking to move to other places. I 
want to read an excerpt from a letter from Carmel Therapeutics, which 
is a Pittsburgh-based company. The President and CEO is Alan West and 
he sent me a letter last month in which he states that:

        It has also been (this ``it'' he's referring to is the Medical 
        Device Tax) a strong factor in discouraging venture capital 
        from even considering medical device and early stage deals. 
        Currently the majority, 55%, of clinical trials are now being 
        conducted overseas. And most novel medical devices are now 
        launched outside the U.S. 4 to 5 years before they are 
        available in the United States, according to the U.S. 
        Department of Commerce. This is the complete opposite of the 
        situation only a few years ago when the U.S. was taking the 
        lead. As a case in point, my company Carmel Therapeutics 
        conducted a clinical trial in South Africa and is planning to 
        launch our first product next year in Europe.

    As I said earlier, I'm concerned that of course if we slow down the 
pace of new development of new medical devices, we will harm the 
patients who would benefit from these. And so for these and other 
reasons I am very hopeful that we will, in this Congress, be able to 
repeal the Medical Device Tax. I am pleased that we have had bipartisan 
support for this concept. We had 79 United States Senators, obviously 
big majorities in both parties, every republican, a large majority of 
democrats voting in favor of an amendment to the budget resolution in 
2013. I'm delighted that we have bipartisan support for the bill to 
repeal it entirely. Again, I want to thank Chairman Hatch for his 
cooperation in this effort. I want to thank the members of the 
Committee who are here and the witnesses. And at this time I would 
yield to our Ranking Member, Debbie Stabenow. Again I want to mention 
how grateful I am for her leadership on healthcare issues in general, 
her leadership in this Committee, and at this time I recognize her for 
an opening statement.

                                 ______
                                 

                             Communications

                              ----------                              


           Advanced Medical Technology Association (AdvaMed)

701 Pennsylvania Avenue, NW
Suite 800
Washington, DC 20004-2654
Tel: 202-783-8700
Fax: 202-783-8750
www.AdvaMed.org

April 22, 2015

The Honorable Patrick J. Toomey
Chairman, Senate Finance Subcommittee on Health
248 Russell Senate Office Building
Washington, D.C. 20510

The Honorable Debbie Stabenow
Ranking Member, Senate Finance Subcommittee on Health
731 Hart Senate Office Building
Washington, D.C. 20510

Dear Chairman Toomey and Ranking Member Stabenow,

I am pleased to submit this statement for the record on behalf of the 
Advanced Medical Technology Association (AdvaMed), representing over 
300 medical device, imaging, and diagnostic technology manufacturers. I 
want to thank both of you for holding this important hearing 
highlighting the negative impact the medical device tax is having on 
American jobs, innovation and patients.

The medical technology industry is central to the development of 
medical devices and diagnostics that will provide the life-saving and 
life-enhancing treatments of the future. Patient access to advanced 
medical technology generates efficiencies and cost savings for the 
health care system, and improves the quality of patient care. Between 
1980 and 2010, advanced medical technology helped cut the number of 
days people spent in hospitals by more than half and add five years to 
U.S. life expectancy while reducing fatalities from heart disease and 
stroke by more than half.

The industry is also an engine of economic growth for the U.S., 
generating high wage manufacturing jobs and a favorable balance of 
payments. More notably, the impact of medical technology on economic 
growth and competitiveness goes well beyond the jobs and economic 
activity associated with industry R&D and manufacturing. A recent study 
by the Milken Foundation examined four diseases and a limited number of 
technologies used to treat those diseases. It found significant 
increases in labor force participation and productivity directly 
attributable to the technologies' contribution to reducing the burden 
of illness.

Evidence continues to mount how the medical device tax is a drag on a 
high-technology, research-based manufacturing sector that provides 
life-saving, life-enhancing innovations. A recent survey of AdvaMed's 
membership underscores the need to repeal this tax as companies are 
forced to curtail R&D and other capital investments--cuts that may 
chill medical progress for decades to come. More than half of survey 
respondents (53 percent) said they had reduced R&D as a result of the 
tax, and 58 percent said they would consider further or first-time 
reductions in R&D if the tax stays in effect.

We commend the Committee for its interest in these issues and 
appreciate the opportunity to discuss the impact of this tax on the 
industry in more detail. We look forward to a substantive discussion 
today and to advancing legislation in the House and Senate to repeal 
the tax. There is strong bipartisan support in both houses of Congress 
for repeal, and AdvaMed looks forward to working with our industry 
colleagues, patients, providers, research organizations, and members of 
Congress to achieve this goal.

Thank you again for the opportunity to submit our comments for the 
record.

Sincerely,

Steve Ubl
President and CEO, AdvaMed

                                 ______
                                 
                          Alcon Research, Ltd.

                          714 Columbia Avenue

                     Sinking Spring, PA, 19608-1405

                            T: 610-670-3600

                             www.alcon.com

April 30, 2015

The Honorable Orrin G. Hatch        The Honorable Ron Wyden
Chairman                            Ranking Member
Finance Committee                   Finance Committee
United States Senate                United States Senate
Washington, DC 20510                Washington, DC 20510

The Honorable Patrick J. Toomey     The Honorable Debbie Stabenow
Chairman                            Ranking Member
Subcommittee on Health Care         Subcommittee on Health Care
Finance Committee                   Finance Committee
United States Senate                United States Senate
Washington, DC 20510                Washington, DC 20510

Dear Chairman Hatch, Ranking Member Wyden, Chairman Toomey, and Ranking 
Member Stabenow:

Alcon is the leading global manufacturer and marketer of products for 
vision care and treatment of eye disorders. Our comprehensive portfolio 
includes medical devices used by surgeons to treat eye diseases such as 
cataracts, glaucoma, and diseases of the retina.

Alcon Research, Ltd. has a manufacturing facility in Sinking Spring, PA 
for the production of disposable single-use medical devices for 
cataract and vitreoretinal surgeries. The Sinking Spring facility 
employs approximately 700 associates.

We have become aware that you will be holding a hearing on Thursday, 
April 23, 2015 to consider repealing the device tax.

The device tax went into effect on January 1, 2013 resulting in a 
daily, real world impact on medical device companies and patients. It 
threatens innovation and jobs across the nation. According to an 
industry survey, forgone hiring and layoffs have cost 33,000 industry 
jobs and as many as 165,000 jobs overall. As many as one-third of 
device manufactures have reduced their budgets as a result of the tax, 
hampering medical innovation and slowing medical progress.

The knowledge that Alcon has gained over decades of research, 
manufacturing, and experience with highly-skilled eye surgeons has 
guided us so that we meet the needs of patients with the most 
innovative technologies available today. Our work enables excellent 
outcomes of eye surgery, and it is only through continued investment 
and innovation that we will enable surgeons to offer even better 
outcomes in the future.

We urge senate members to act to repeal the medical device tax and 
engage in a full discussion of tax reform and the right tax structure 
for Innovative manufacturing Industries like the medical device 
industry.

Sincerely,

Richard L. Patterson
Vice President, General Manager
Sinking Spring Operations

                                 ______
                                 
                      Alliance for Aging Research

                     1700 K Street, NW., Suite 740

                          Washington, DC 20006

                             T 202-293-2856

 United States Senate Committee on Finance, Subcommittee on Health Care

    ``A Fresh Look at the Impact of the Medical Device Tax on Jobs, 
                       Innovation, and Patients''

                             April 23, 2015

The Alliance for Aging Research submits for the record the following 
statement by its President and Chief Executive Officer Sue Peschin, 
MHS:

``The Alliance for Aging Research believes that advances in research 
help people live longer, happier, more productive lives and reduce 
health care costs over the long term. We support policies that advance 
medical research and innovation and address the needs of aging 
patients.

``For this reason, the Alliance for Aging Research is unwavering in our 
support of efforts to repeal the medical device tax. We believe the tax 
drains critical resources away from research and development of 
technologies that can improve detection and treatment of age-related 
diseases and conditions, as well as the way we provide care for the 
aging population.

``The unmet health challenges of older adults are an enormous financial 
and human burden. More resources--not less--are needed to address these 
challenges.''

                                 ______
                                 
             American Association of Neurological Surgeons

                                 UPDATE

                              neurosurgery

FOR IMMEDIATE RELEASE          Contact:    Katie Orrico
April 23, 2015                                       (202) 446-2024
                                                     
[email protected]

     Senate Finance Health Subcommittee Holds Critical Hearing on 
                         the Medical Device Tax

          Neurosurgeons Urge Congress to Repeal the Device Tax

Washington, DC--The American Association of Neurological Surgeons 
(AANS) and Congress of Neurological Surgeons (CNS) commend the Health 
Subcommittee of the U.S. Senate Committee on Finance for holding a 
hearing on the impact of the medical device tax on jobs, innovation and 
patients. This is a critical step to repealing this detrimental tax.

Created by the Affordable Care Act, the medical device tax is a 2.3 
percent excise tax that applies to the gross sales of medical device 
products. This tax imposes over $30 billion in new taxes and is 
adversely affecting medical innovation and patient care.

AANS president, Robert E. Harbaugh, MD, noted, ``Repealing the medical 
device tax is among neurosurgery's top legislative priorities and we 
applaud the bipartisan efforts of Congress to abolish this arbitrary 
tax, which is ill-advised and ultimately will negatively impact our 
patients.''

According to a recent study published by the Advanced Medical 
Technology Association (AdvaMed), as many as 195,000 jobs may be lost 
due to the tax, either through layoffs or forgone jobs that would have 
been created.

``Our health care system needs innovation to improve patient care and 
save lives. Instead, this tax stifles innovation and reduces patient 
access to new lifesaving technologies,'' said CNS president, Nathan R. 
Selden, MD.

The AANS and CNS have endorsed both S. 149, the ``Medical Device Access 
and Innovation Protection Act,'' and H.R. 160, the ``Protect Medical 
Innovation Act,'' and look forward to working with the members of the 
Senate Finance Committee to develop policy solutions to better support 
medical innovation and increase treatment options for our patients.

                                  ###

The American Association of Neurological Surgeons (AANS), founded in 
1931, and the Congress of Neurological Surgeons (CNS), founded in 1951, 
are the two largest scientific and educational associations for 
neurosurgical professionals in the world. These groups represent over 
8,000 neurosurgeons worldwide. Neurological surgery is the medical 
specialty concerned with the prevention, diagnosis, treatment and 
rehabilitation of disorders that affect the entire nervous system, 
including the spinal column, spinal cord, brain and peripheral nerves. 
For more information, please visit www.aans.org or www.cns.org or 
www.neurosurgeryblog.org.

                                 ______
                                 
             American Dental Association' (ADA)

               America's leading advocate for oral health

                   1111 14th Street, NW., Suite 1200

                          Washington, DC 20005

                             T 202-898-2400

                             F 202-898-2437

                              www.ada.org

April 22, 2015

The Honorable Orrin G. Hatch        The Honorable Ron Wyden
Chairman                            Ranking Member
Committee on Finance                Committee on Finance
United States Senate                United States Senate
219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
Washington, D.C. 20510              Washington, D.C. 20510

Dear Chairman Hatch and Ranking Member Wyden:

The American Dental Association (ADA), the nation's oldest and largest 
dental association, representing more than 157,000 dentist members, 
strongly supports the repeal of the medical device excise tax. The 
dental manufacturing industry estimates that the medical device excise 
tax will increase the cost of dental care by over $160 million annually 
resulting in harm to our patients and an increase in the overall cost 
of healthcare.

Good oral health is an essential part of an individual's overall health 
and well-being. An increase in the cost of oral health care as a result 
of the excise tax on medical devices--including restorative materials, 
instruments, impression materials and equipment--could make healthcare 
less affordable and act as a deterrent to patients seeking dental care.

As you know, health care professionals who operate solo or small group 
practices are economic engines for their communities. In 2010, the most 
recent year for which we have survey data, 96.2 percent of the dentists 
surveyed reported that they work in practices comprising five or fewer 
dentists. The nature of dental insurance plans means that a dentist's 
reimbursements may not keep pace with this tax and many offices will 
have to absorb most of the increased cost. Operating costs for dental 
practices, particularly specialties, are significant, and the ability 
to sustain or grow small businesses like dental practices will be 
further constrained under this new excise tax.

Again, we strongly urge you to repeal the burdensome excise tax on 
medical devices. If you have any questions regarding the impact of the 
tax on a dental practice or our patients, please contact Margo 
Klosterman at [email protected] or 202-898-2437.

Sincerely,

Maxine Feinberg, D.D.S.             Kathleen T. O'Loughlin, D.M.D., 
                                    M.P.H.
President                           Executive Director and Chief 
                                    Operating Officer

                                 ______
                                 
                           ARC Medical, Inc. 
                      Anesthesia/Respiratory Care

                   4296 Cowan Road  Tucker, GA 30084

                Phone (404) 373-8311 Fax (404) 373-8385

                              800-950-ARC1

Wednesday, April 22, 2015

Brad Grantz
Senate Finance Committee
Washington, DC

Ladies and Gentlemen,

The Medical Device Tax has severely limited the ability of my company 
to add jobs and the additional cost imposed by the tax has limited our 
ability to provide better pricing for new customers.

One additional result of the tax is the impact on the profit sharing 
plan of our company.

As the tax affects directly the bottom line of the company, there has 
been less profit to distribute to our employees for their future. This 
has caused considerable harm to the employees.

For the good of the cost of healthcare and the betterment of company 
employees, please repeal this onerous tax.

Best regards,

Hal Norris, President

ARC Medical, Inc.
Direct: 800-950-2720 ext. 210
Outside USA: 404-373-8300 ext. 210
Fax: 404-373-8385

www.arcmedical.com

                                 ______
                                 
                                Biocom 
                   accelerating life science success
April 22, 2015

The Honorable Orrin G. Hatch        The Honorable Ron Wyden
Chairman                            Ranking Member
Finance Committee                   Finance Committee
United States Senate                United States Senate
Washington, DC 20510                Washington, DC 20510

 The Honorable Patrick J. Toomey    The Honorable Debbie Stabenow
Chairman                            Ranking Member
Subcommittee on Health Care         Subcommittee on Health Care
Finance Committee                   Finance Committee
United States Senate                United States Senate
Washington, DC 20510                Washington, DC 20510

Dear Chairman Hatch, Ranking Member Wyden, Chairman Toomey, and Ranking 
Member Stabenow:

Biocom represents the Southern California life science industry and 
leads advocacy efforts to positively influence the region's life 
science community in the development and delivery of innovative 
products. Biocom and our medical device member companies, who are 
dedicated to developing life-enhancing and life-saving technologies for 
patients in need, are opposed to the medical device excise tax and 
support its full repeal.

Over the past decades, the American medical device industry has given 
patients access to cutting edge, life-saving technologies, from insulin 
pumps and heart valves to pacemakers and artificial limbs. Such 
products have helped increase life expectancy while reducing the burden 
of chronic diseases, which represent more than 70 percent of health 
care costs. Today, over 8,000 medical device manufacturers in the 
United States invest nearly $10 billion in research and development 
(R&D) annually, and employ more than 420,000 Americans. In California, 
the medical device industry generates $50 billion in economic activity 
annually and supports over 80,000 jobs.

The tax, which took effect in January 2013, is expected to cost medical 
device manufacturers $30 billion over the next 10 years. Similar excise 
taxes are levied by the federal government on products such as alcohol 
and tobacco to discourage their use. In addition, the tax is assessed 
on revenue and, therefore, is particularly burdensome for innovative 
start-ups and small companies that are not yet profitable. Contrary to 
some assertions, the tax is not being offset by increased demand for 
medical devices as a result of health care reform because the majority 
of device-intensive medical procedures are performed on patients that 
are older and already had private insurance or Medicare coverage.

Since its implementation, the medical device tax has effectively 
stifled R&D investments and medical innovation, hampered economic 
growth and job creation, and jeopardized patient access to breakthrough 
devices and therapies. According to an industry survey,\1\ 14,000 
industry jobs have been lost in the tax's first year, along with the 
forgone hiring of 19,000, resulting in a total direct industry 
employment impact of approximately 33,000 jobs. In addition, companies 
have had to reduce R&D investments and/or relocate or expand 
manufacturing outside of the U.S. as the result of the tax.
---------------------------------------------------------------------------
    \1\ Impact of the Medical Device Excise Tax--A Status Report from 
AdvaMed.

The negative impact of the tax on medical innovation and the U.S. 
economy has been widely recognized and a repeal of the device tax has 
broad bipartisan support in both the House and the Senate. Biocom 
strongly supports a repeal of the medical device tax and stands ready 
to work with you to ensure that patients continue to have access to the 
---------------------------------------------------------------------------
most innovative technologies in the world.

Thank you for your consideration of our concerns.

Sincerely,

Joe Panetta
President and CEO
Biocom

                                 ______
                                 
                    Carmell Therapeutics Corporation

           3636 Boulevard of the Allies, Pittsburgh, PA 15213

                           www.carmellrx.com

                                                     April 22, 2015
The Honorable Patrick J. Toomey
Chairman
Senate Finance Subcommittee on Health Care
248 Russell Senate Office Building
Washington, DC 20510

The Honorable Debbie Stabenow
Ranking Member
Senate Finance Subcommittee on Health Care
731 Hart Senate Office Building
Washington, DC 20510

                     Re: Statement for the Record:

               Senate Finance Subcommittee on Health Care

            Hearing on the Impact of the Medical Device Tax

Dear Chairman Toomey and Ranking Member Stabenow:

I have been involved in start-ups and small companies in the life 
sciences industry for over 35 years. Advances in technology during my 
career have enabled the development of important medical products that 
not only save lives and preserve a quality of life for patients, but 
also reduce the costs of treatment. But I have never experienced a more 
difficult time to start a company and raise working capital. The 
Medical Device Tax, while appearing on the surface to sound innocuous, 
has contributed much to this already difficult situation. Because 
venture capital in the U.S. has all but abandoned investments in pre-
revenue life sciences companies, it is now imperative for such 
companies to achieve early revenues to demonstrate market acceptance 
and attract investment, even if those early revenues will not by 
themselves get the company to cash flow positive. This misguided tax 
makes that process even more tenuous. It has also been a strong factor 
in discouraging venture capital from even considering medical device 
and early stage deals. Currently the majority (55%) of clinical trials 
is now being conducted overseas (NIH), and most novel medical devices 
are now launched outside the U.S. 4-5 years before they are available 
in the U.S. (U.S. Department of Commerce). This is the complete 
opposite of the situation of only a few years ago when the U.S. was 
taking the lead. As a case in point, my company, Carmell 
Therapeutics,conducted a clinical trial in South Africa and is planning 
to launch our first product next year in Europe.

Senator Stabenow--you and I met a few years ago when I was CEO of the 
Michigan Tech SmartZone, a great program that has become a model not 
only for other Michigan SmartZones but other states as well. Senator 
Toomey--you and I met last year at Carnegie Mellon University, from 
where Carmell was spawned. I hope you both agree that this tax, instead 
of creating meaningful tax revenues as was its original purpose, has 
had the unintended consequence of dissuading institutional investment 
and discouraging entrepreneurship in a vital industry already under 
significant pressures. In my opinion, the Medical Device Tax is the 
proverbial straw that is breaking the backs of the medical device 
industry by dissuading innovation. Thank you for the opportunity to 
present my views.

Sincerely,

Alan I. West
President & CEO

                                 ______
                                 
                        COOK GROUP INCORPORATED

                            750 DANIELS WAY,

                             P.O. BOX 1608

                   BLOOMINGTON, IN 47402-1608 U.S.A.

                 PHONE: 812-331-1025 FAX: 812-331-8990

                           www.cookgroup.com

                             April 22, 2015

Senate Committee on Finance
Attn: Editorial and Document Section
Rm. SD-219
Dirksen Senate Office Building
Washington, DC 20510-6200

Re:  Written Testimony for the Record before the Finance Subcommittee 
on Health Care Submitted by the Cook Group, Inc., for the April 23, 
2015 Hearing Entitled, ``A Fresh Look at the Impact of the Medical 
Device Tax on Jobs, Innovation, and Patients.''

Dear Chairman Toomey and Ranking Member Stabenow:

    Thank you for the opportunity to submit written testimony for the 
record to the Senate Finance Health Care Subcommittee's hearing 
entitled, ``A Fresh Look at the Impact of the Medical Device Tax on 
Jobs, Innovation, and Patients.'' We are pleased to provide our 
thoughts on the impact of the medical device tax on jobs, innovation, 
and patients. This is a tax that affects not only U.S. manufacturing 
jobs, but also patient access to the latest in medical technology.

    I submit these comments as the Chairman of Cook. It has been my 
privilege to be associated with Cook for nearly 50 years.

History of Cook

    Since 1963, the company has grown from its birth in a spare bedroom 
in Bill and Gayle Cook's apartment to a world leader in advancing 
medical care for patients worldwide. There were many setbacks and 
countless challenges that threatened the success of Cook as our 
founder, Bill Cook, sought to build an innovative American company that 
would improve patient care. But Bill was resilient and had the same 
entrepreneurial spirit that makes this country so unique. These traits, 
combined with his focus on the patient, are the foundation of Cook's 
success.

    Today, Cook is the largest, family-owned medical device 
manufacturer in the world. We are best known as a pioneer in the field 
of interventional medicine. Our products benefit patients by providing 
doctors with a means of diagnosis and intervention using minimally 
invasive techniques, as well as by providing innovative products for 
surgical applications. Cook sells more than 14,000 different product 
variations with 13,600 of these products serving markets of $1 million 
or less worldwide. The other 400 are large market technologies. These 
devices are used by physicians in the more than 40 medical disciplines 
and range from simple wire guides, needles and catheters, to grafts, 
drug-eluting stents and tissue engineering.

    Cook is headquartered in Bloomington, Indiana with its U.S. 
manufacturing plants in Indiana, Pennsylvania, North Carolina, Illinois 
and California. I should note, Mr. Chairman, we have two Pennsylvania 
facilities just outside Pittsburgh: Cook Vascular and Cook Myosite. 
Between the two we employ more than 200 employees who are involved in 
pacemaker lead extraction technology, vascular access ports and flow 
probe monitoring technology, accessory tools for in vitro 
fertilization, and research involving the use of adult skeletal muscle-
derived cells to treat patients with a variety of muscle-related 
disorders, such as female urinary incontinence, among other areas. Cook 
also has manufacturing facilities in Ireland, Denmark and Australia and 
has direct sales in most of the world where the health care system is 
developed.

    Our company employs nearly 12,000 people around the world with 
approximately 8,500 of these employees based in the United States. In 
the U.S., women comprise approximately 76 percent of our device 
production.

    Like many others in the device industry, Cook is a net-exporter. 
While 60 percent of our sales are outside the United States, we 
manufacture more than 75 percent of our devices in this country. We 
want to be able to continue doing this.

The Medical Device Excise Tax

    The most significant barrier to our future U.S. job growth is the 
medical device excise tax. The Affordable Care Act of 2010 (ACA) 
contained a revenue provision that placed an excise tax of 2.3 percent 
on the sale of medical devices in the U.S. beginning January 1, 2013. 
While that does not sound like much, it is a tax on gross revenue. It 
comes off the top and not on earnings, and it is huge. Further, whether 
a manufacturer makes a profit or not, the excise tax applies. For a 
company like ours, which pays about 31 percent of our U.S. earnings in 
federal and state corporate income taxes, the excise tax will increase 
our effective rate on those U.S. earnings to 41 percent--a 32 percent 
increase. It is true that imported goods are subject to the excise tax 
when sold in the U.S.; however, corporate tax rates on manufacturing 
income earned outside the U.S. are much lower. It is also important to 
note that there is not a state corporate tax on top of the federal 
corporate tax in countries such as Ireland (at 12.5 percent). Everyone 
agrees we need to increase U.S. competitiveness by lowering the U.S. 
corporate tax rate. So, how can folks believe that an additional 30 
percent increase in this industry's effective rate makes the U.S. more 
competitive?

    Since its enactment, there have been frequent announcements about 
device companies freezing capital expenditures, reducing research and 
development, expanding overseas rather than in the U.S., and/or in many 
instances, laying off employees due to the excise tax. It makes no 
sense to encourage manufacturing in the U.S. and at the same time 
impose an excise tax on one of the few industries that exports more 
products than it imports. Start-ups that have not yet turned a profit 
still must pay the excise tax and over time this will serve to threaten 
investment in and the future of this innovative industry, which is the 
envy of the world. Why would we want to impose an excise tax on one of 
our fastest growing and most innovative industries--medical 
technology--that increases the federal tax burden on medical device 
manufacturers by 29 percent? (Ernst and Young, Effect of the Medical 
Device Excise Tax on the Federal Tax Liability of the Medical Device 
Industry, November 2012).

Myths About the Device Excise Tax

    1) Device manufacturers will pass along the amount of the tax--
False.

    Some say that a new 2.3 percent tax will only lead device 
manufacturers to pass on the cost of the new excise tax to purchasers 
(generally hospitals). That simply is not true for most companies. 
Hospitals are under tremendous cost pressure today with 40 percent of 
hospitals operating in the red. The hospitals and group purchasing 
organizations are saying no. This is a very competitive industry and 
customers have many suppliers.

    Furthermore, our company, like most in our industry, has 
experienced significant increases in operational costs: health care 
costs for employees, salaries and wages, utilities, raw materials, 
regulatory costs, etc. We have seen the unemployment insurance tax 
increase along with other state, local and property taxes. Companies 
simply cannot pass all those costs on, let alone a 2.3 percent tax on 
gross sales.

    2) Device manufacturers will have an increased market of new 
patients as the uninsured now become insured and therefore seek out new 
treatments--False.

    Many believe that the ACA will add more patients and device 
companies will make more money as a result. This, too, is a myth for 
the vast majority of device companies. According to The U.S. Department 
of Health and Human Services (HHS), 71 percent of the ``new insured'' 
are younger than 45 years, a great majority of whom will not need our 
technologies. I have seen no credible studies that indicate an increase 
in sales, and our research and other studies demonstrate that there 
will not be an increase in the sales of medical devices and there will 
be no windfall profits.

    I must also point out that a 2012 Roth Capital survey of companies 
showed that their experience in Massachusetts after universal health 
care was enacted showed no increase in the rate of growth compared to 
the increase in growth of rest of the nation. Indeed, Cook's growth 
rate in Massachusetts trends slightly behind the national growth.

Impact of the Device Excise Tax on Cook

    In order to offset a big expense like the excise tax, a company can 
only look to employees, research and development or capital. Cook has 
never had to lay-off an employee in our 50+ years of business, and we 
will not start now. However, we must make hard choices.

    Cook has made the difficult decision that without repeal, we will 
move important new, device-related product lines outside of the U.S. 
Our previous plans to open up five new device manufacturing facilities 
in American towns continue to be on hold as we use capital intended for 
these projects to pay the excise tax.

    The direct impact of this tax is squarely on U.S. jobs and because 
device manufacturing is performed mainly by a female workforce in many 
sectors, it will hit these workers hardest. Cook will adjust, but those 
that will be most affected by the device excise tax will be the 
potential future employees and patients who seek access in this country 
to innovative medical technologies. Make no mistake about it: we want 
to develop and manufacture our devices in the U.S., but this tax is 
preventing this growth in this country. It is a shame that potential 
employees in Indiana, Illinois, Pennsylvania, California, North 
Carolina and in other states who can compete with workers any place in 
the world based on their productivity, are going to be denied the 
chance by government. I emphasize that for Cook this is not about labor 
costs. Our industry needs an educated, skilled labor force and we have 
the best workers in the world here in the U.S.

    This migration of manufacturing, coupled with the fact that most 
clinical studies are now being conducted outside the U.S., will result 
in new, self-sustaining medical technology clusters that will threaten 
the United States' global leadership position in medical technology, 
innovation and manufacturing. This migration will result in delays and 
in some cases barriers for American patients and their providers who 
need innovative technology to ensure quality care.

Senate Legislation to Repeal the Medical Device Excise Tax--S. 149

    But before this happens Congress can act to repeal this onerous 
excise tax. We are grateful to the 35 sponsors of S. 149, a bill 
introduced by Senators Hatch and Klobuchar, as well as our home-state 
Senators Burr, Casey, Coats, Donnelly, Kirk, Tillis and Chairman 
Toomey, to repeal the medical device excise tax. In fact, many 
additional Senators serving on the Finance Committee have cosponsored 
this legislation or expressed support for repeal of this tax, and we 
are grateful for your acknowledgment that this excise tax will have 
serious, unintended consequences. We hope as you deliberate further 
about the impact of the device excise tax on jobs, innovation and 
patients, you will consider advancing the repeal legislation.

    I should note there have been a few recent reports looking at the 
impact of the device tax. But I urge caution: examining stock prices to 
determine the impact of the device tax is a highly inaccurate measure. 
Companies responsible to shareholders are going to do what it takes to 
make their stock prices and profits healthy. Those steps include 
eliminating and/or moving U.S. jobs off-shore and not expanding 
manufacturing in the U.S. A better way to accurately measure the impact 
of the device tax is to hear from a statistically significant sample of 
companies that reflect the U.S. device industry and ask about the 
direct impact on jobs, medical innovation and patients.

    Mr. Chairman, we are very grateful for your leadership and ongoing 
efforts to repeal the medical device excise tax. This issue is very 
important to American jobs, medical innovation, and more importantly to 
patients. I congratulate you and Ranking Member Stabenow for taking 
this important step today, but please know more work is urgently 
needed. The country needs your leadership to once and for all repeal 
this medical device excise tax before it is too late.

Respectfully submitted,

Stephen L. Ferguson
Chairman of the Board

                                 ______
                                 
                      CryoLife', Inc. 
                Life Restoring TechnologiesSM

                       1655 Roberts Boulevard NW

                        Kennesaw, Georgia 30144

                            T (770) 419-3355

                 T (800) 438-8285 In the USA and Canada

                            F (770) 426-0031

                            www.CryoLife.com

April 23, 2015

The Honorable Orrin G. Hatch
Chair, Senate Finance Committee

The Honorable Ron Wyden
Ranking Member

The Honorable Johnny Isakson
Committee Member, Georgia Senator

RE:  Impact of the Medical Device Tax

Dear Senators Hatch, Wyden and Isakson:

In anticipation of this week's upcoming Senate Finance Committee 
hearing regarding ``A Fresh Look at the Impact of the Medical Device 
Tax on Jobs, Innovation, and Patients,'' I am writing, as the Chairman, 
President and CEO of Georgia-based CryoLife, Inc., and a long-time 
senior executive in the medical device industry at Medtronic, Genzyme 
and Deknatel/Snowden-Pencer, Inc., to respectfully request repeal of 
the medical device excise tax (the ``Tax''). Based on my long-term 
experience in the medical device industry, I firmly believe that the 
Tax, now estimated to generate approximately $25 billion, has and will 
continue to adversely impact patient care, innovation and patient 
access to innovative medical technologies and therapies.

In January 2015, over 1,000 organizations jointly submitted a letter to 
Majority and Minority leaders of the Senate and House. In that letter, 
those organizations detailed the significant adverse impact the Tax is 
having on the U.S. medical device industry in terms of research and 
development (``R&D''), jobs, above-market wages and cutting-edge 
innovation leading to more and better device therapy and treatment for 
patients. That letter also described how the hardships associated with 
the Tax are not, as Congress originally anticipated when it passed the 
Tax, being offset by increased demand for medical devices.

To bring these adverse impacts into sharper focus for you, I would like 
to share our experience at CryoLife and the particularly harsh impact 
the Tax imposes on smaller companies, such as ours, whose annual 
revenues are less than $200M.

CryoLife, headquartered in Kennesaw, Georgia, is a leader in the 
manufacturing, processing, and distribution of implantable living 
tissues and medical devices used in cardiac and vascular surgical 
procedures. We generate approximately $150M in annual revenues, and we 
employ approximately 500 people in the U.S. in higher-wage, technology-
driven jobs. For 2014, our average hourly wage for hourly U.S. 
employees was approximately $18.50, and our average annual salary for 
salaried U.S. employees was approximately $90,000.

CryoLife is a leader in innovation in implantable preserved human 
cardiac and vascular tissues and medical devices:

    Among our most significant innovations is our 
        SynerGraft' Technology, a patented decellularization 
        process that virtually eliminates the presence of allogenic 
        donor cells, while maintaining the structural integrity of the 
        tissue. This process serves as the foundation for the next 
        generation of implantable biological tissues, which have saved 
        or dramatically improved the quality of life for more than 
        12,000 patients globally since it was launched in 2000.

    We manufacture and distribute BioGlue' Surgical 
        Adhesive, an FDA-approved protein hydrogel technology, which is 
        indicated as an adjunct to sutures and staples for use in adult 
        patients in open surgical repair of large vessels. We estimate 
        that BioGlue has been used in more than 1,000,000 patients 
        globally since its launch in 1998.

    We manufacture and distribute the CardioGenesis cardiac laser 
        therapy system for the treatment of coronary artery disease in 
        patients with severe angina and typically no other options.

    We market the Hemodialysis Reliable Outflow Graft, a solution for 
        end-stage renal disease in certain hemodialysis patients.

In 2014, 69% of CryoLife's worldwide product revenues were from 
``devices,'' within the meaning of the Tax, and 67% of its device 
revenues were from U.S.-based sales subject to the Tax. As a result, 
CryoLife paid approximately $1.1M in Tax for 2014. Further, CryoLife 
estimates that its costs to date for administrative and auditor support 
to ensure appropriate accounting for and payment of the Tax have been 
approximately $27,000. We estimate that the adverse impact of the Tax 
on our 2014 net income was in excess of $1.1M.

In 2014, due in part to the Tax, CryoLife was able to spend only 
approximately 6% of its revenues (or approximately $8.7M) on R&D, and 
it was not able to increase the size of its workforce, which would have 
better enabled CryoLife to deliver more of its life-enhancing and life-
saving technologies to more patients. CryoLife also had to defer 
significant investments in capital and start-up companies, all of which 
would have furthered innovation, as well as delay investment in 
clinical trials to support product approvals.

The Tax has not produced the primary benefit--enhanced patient access 
to medical device technology--which was the purported basis for its 
passage. To the contrary, it has largely resulted in reduced 
innovation, jobs, pay and access to care.

I respectfully request and thank you in advance for your timely action 
on legislation to repeal the Tax.

Sincerely,

J. Patrick Mackin
Chairman, President and CEO
CryoLife, Inc.

                                 ______
                                 
                           ELITechGroup, Inc.

                            dba Wescor, Inc.

                              370 W 1700 S

                          Logan, UT 84321 USA

                          Tel: +1 435-512-3650

                          www.elitechgroup.com

                                                      21 April 2015

Senate Finance Committee
Washington, D.C.
c/o Brad Grantz
[email protected]

Dear Senate Finance Committee,

I am a president of a relatively small medical device company based in 
Logan, Utah. Our company has about 100 employees here and another 80 
employees in other states. I would like to describe the effect of the 
Medical Device Tax on our company.

A tax of 2.3% probably doesn't sound like a lot to the average 
American. But this is not a tax on how much we earn; it is on how much 
we sell. When our company is healthy, we allocate about 10% of our 
sales revenue to research and development, to improve our existing 
technology and to create new products that make health care safer, 
cheaper, and more effective. Repeal of the 2.3% device tax could 
increase our R&D budget by 23%! The majority of that budget is used for 
engineering salaries, so it represents the salary of several highly 
skilled professionals.

My business unit remains profitable, although at a lower level, with 
the device tax. But another business unit of our company has not 
achieved profitability in the U.S. market. It may be at risk of being 
shut down. With the device tax, it's not enough to reach a breakeven 
point--in order to justify continued operation, it has to achieve an 
additional 2.3% of margin.

Even the activities funded by the revenue from the device tax will 
eventually suffer when overall medical device development declines, 
followed by overall sales.

Please give the immediate repeal of this unwise and burdensome tax a 
very high priority.

Best regards,

Dennis R. Briscoe
President, Biomedical Systems
Division of ELITechGroup Inc.

                                 ______
                                 
                          Exactech'

                           2320 NW 66TH COURT

                         GAINESVILLE, FL 32653

                              352-377-7140

                            FAX 352-378-2677

April 21, 2015

The Honorable Patrick J. Toomey
Chairman
Senate Finance Subcommittee on Health Care
248 Russell Senate Office Building
Washington, DC 20510

The Honorable Debbie Stabenow
Ranking Member
Senate Finance Subcommittee on Health Care
731 Hart Senate Office Building
Washington, DC 20510

Dear Chairman Toomey and Ranking Member Stabenow:

The medical device tax is damaging to our country. Forget that it is 
unfair to single out a single industry. Let's think back to the 
``Yacht'' excise tax. It's cost was 50,000 lost jobs and a permanent 
loss of a major portion of the U.S. boat industry to Europe (mainly 
Italy) and to Asia. We see the beginning of the same for medical 
devices. This tax combined with the dysfunctionality of the FDA 
depresses jobs, innovation, health care breakthroughs, and business in 
general. In addition, it can only increase health costs. This tax never 
should have been enacted and needs to go.

Respectfully,

BILL PETTY, M.D.
Executive Chairman

                        A Great Day in the O.R.

EXACTECH exists to improve the quality of life for individuals by 
maintaining their activity and independence. We do this through 
innovative ideas, high-quality products, education and commitment to 
service.

                                 ______
                                 
                 Florida Economic Development Council 
                      Educate. Advocate. Connect.
United States Senate Committee on Finance
Subcommittee on Health Care

     A Fresh Look at the Impact of the Medical Device Tax on Jobs, 
                        Innovation, and Patients

Thursday, April 23, 2015

Amy Evancho, President & CEO
Florida Economic Development Council
3802 Spectrum Boulevard, Suite 141
Tampa, FL 33612

Dear Chairman Toomey and Ranking Member Stabenow:

I write to you on behalf of the Florida Economic Development Council in 
support of repeal of the medical device excise tax. This burdensome and 
harmful tax negatively impacts job growth, innovation, and patient 
care. We are pleased that the committee is holding a hearing to examine 
the negative impact of the tax and urge you to continue advancing this 
important legislative initiative.

The Florida Economic Development Council is the professional 
association of economic, workforce, and community developers who work 
in Florida's 67 counties, over 400 cities, 24 workforce regions, 28 
colleges, 12 universities, as well as utilities, ports, airports, and 
industrial authorities. We support job-creating innovation that 
bolsters our states' and nation's economy. The medical device tax 
directly and negatively impacts our members ability to grow jobs, 
limits resource allocation to innovation and research and development, 
and stalls development of technologies that saves lives.

Across the country and in Florida, the medical technology industry is a 
unique American success story--both for patients and the economy. The 
United States is the world leader in manufacturing life-saving and 
life-enhancing treatments, and the industry is an important engine for 
economic growth. According to surveys conducted by AdvaMed, the medical 
technology industry employs more than 400,000 workers nationwide; 
generates approximately $25 billion in payroll; pays out salaries that 
are 40 percent more than the national average ($58,000 vs. $42,000); 
and invests nearly $10 billion in research and development (R&D) 
annually. The industry is fueled by innovative companies, many of which 
are small businesses with 80 percent of companies having fewer than 50 
employees and 98 percent with fewer than 500 employees.

Unfortunately, the medical device tax stifles innovation and has 
already cost thousands of high-paying jobs. The tax resulted in 
employment reductions of 14,000 industry workers in 2013, with 
approximately 4,500 additional jobs lost in 2014, according to a 
January 2015 AdvaMed survey. It has caused companies large and small to 
reduce financial resources that could otherwise be used for R&D.

The medical device tax is particularly problematic for Florida--a state 
that is rich in medical technology manufacturers. Florida is home to 
one of our nation's largest medical device economies--encompassing 662 
device manufacturers employing nearly 21,000 Floridians, paying an 
average annual wage of more than $60,000. Florida is one of the top 
five med-tech job producers in the country; and the vast majority of 
Florida medical device manufacturers (80%+) are small, entrepreneurial 
firms, employing fewer than 25 people. These are the companies that 
have been driving Florida's job creation and innovation in patient care 
in the medical technology sector.

This bad tax is adversely impacting innovation, R&D investment and job 
expansion in our state, and is disproportionately impacting small-to-
midsize companies--the lifeblood of Florida's medical device industry. 
We respectfully request timely action on legislation to repeal this 
burdensome tax. Repeal will create jobs and spur economic growth in 
Florida and around the country by freeing up resources to pay for 
additional research and development and the manufacturing of new 
innovations.

Respectfully,

Amy Evancho,
President & CEO
Florida Economic Development Council, Inc.

                                 ______
                                 
            Florida Medical Manufacturers Consortium (FMMC)
United States Senate Committee on Finance
Subcommittee on Health Care
A Fresh Look at the Impact of the Medical Device Tax on Jobs, 
Innovation, and Patients
Thursday, April 23, 2015

Statement by:
John B. Ray, Executive Director
Florida Medical Manufacturers Consortium
310 W. College Ave, Suite 212
Tallahassee, FL 32301

Dear Chairman Toomey and Ranking Member Stabenow:

The Florida Medical Manufacturers Consortium (FMMC) strongly supports 
the immediate repeal of the medical device excise tax. Thank you for 
holding this important hearing to examine the negative impacts of this 
harmful tax--a tax on innovation and job growth that, unfortunately, 
has been in place for more than two years now.

By way of background, the Florida Medical Manufacturers Consortium 
(FMMC) is a statewide association of over 100 medical technology firms. 
The FMMC exists to further the interests of Florida's medical 
manufacturers by providing networking and education opportunities for 
industry members, facilitating connections with academic institutions, 
and promoting the interests of the industry to the general public and 
governmental organizations. In essence, the FMMC exists to unite, 
promote, and grow the Florida medical device industry, and to enhance 
the business success of its member companies.

Florida is a leader in the medical technology industry. Florida is home 
to one of our nation's largest medical device economies--encompassing 
662 medical device manufacturers, employing nearly 21,000 Floridians 
and paying an average annual wage of more than $60,000. Florida ranks 
3rd nationally in the number of FDA-registered medical device 
establishments. The vast majority of Florida medical device 
manufacturers (80%+) are small, entrepreneurial firms, employing fewer 
than 25 people. These are the companies driving Florida's job creation 
and innovation in patient care in the medical technology sector.

Contrary to some recent studies on the topic, the medical device excise 
tax is eroding our international dominance and competitiveness in the 
medical technology sector. It is costing our country jobs and siphoning 
off precious resources from research and development. Recent, competent 
industry surveys reveal the medical device tax resulted in national 
employment reductions of 14,000 industry workers in 2013, with 
approximately 4,500 additional jobs lost in 2014 (AdvaMed); and 72% of 
companies slowed or halted job creation in the United States to pay the 
medical device tax (MDMA).

Incredibly, this bad tax is based on sales, not profit, and is doing 
the most harm to small to midsize medical device companies--the 
lifeblood of Florida's medical device industry, responsible for the 
lion's share of innovation, scientific discovery and job growth in our 
state. The tax extracts 2.3% on every sale of medical devices, and 
cares not if the company is large or small, or actually making any 
profit at all. Medical device companies are typically not profitable 
for many years, even after winning FDA approval to sell a device. 
Removing precious resources from the top line of these innovative 
manufacturers is devastating their ability to develop new life-saving 
and life-improving devices, and create great jobs for Floridians.

America's medical device industry is one of the few where we still are 
the global leader, and where we actually export more than we import. We 
should be supporting these 21st century innovators, not punishing them. 
Thank you again for your dedicated efforts to repeal the medical device 
excise tax.

Respectfully,

John B. Ray
Executive Director

                                 ______
                                 
                       Gradient Technologies LLC

                             April 23, 2015

The Honorable Patrick J. Toomey     The Honorable Debbie Stabenow
Chairman                            Ranking Member
U.S. Senate                         U.S. Senate
Committee on Finance                Committee on Finance
 Subcommittee on Health Care        Subcommittee on Health Care
248 Russell Senate Office Building  731 Hart Senate Office Building
Washington, DC 20510                Washington, DC 20510

Subject: Imposition of the Medical Device Tax

Dear Chairman Toomey and Ranking Member Stabenow,

I am a private investor who for 20 years has been engaged in scientific 
research and product development intended for the commercialization of 
an innovative transcutaneous (noninvasive) neuromodulation technology 
to substitute electrophysiological alternatives for opioids and 
nonsteroidal inflammatory drugs in managing both acute and chronic 
musculoskeletal pain.

In terms of the information available to members of the Senate Finance 
Committee regarding the consequences of this new medical device tax, I 
offer the following:

    The availability of startup and early-stage investment funds 
        practically evaporated with the Lehman Brothers collapse. Risk 
        capital was initially diverted to either existing late stage 
        ``follow on'' investments or early market launch priorities. 
        Until very recently, the medical device segment of this risk 
        capital marketplace had been refocused to opportunities in 
        other segments of the technology space.

    The U.S. regulatory regime (FDA) continues to be a remarkable 
        challenge; FDA's new proposal for a new device classification, 
        ``wellness'' (a perfunctory exemption from the FDA &C '76 Act 
        medical device regulation for low risk devices, without 
        ascertaining efficacy) simply devalues technology by 
        incentivizing innovations with the vigorish of FDA regulatory 
        avoidance. These FDA challenges transcend to both CMS and 
        private pay for reimbursement issues. In this healthcare 
        transition both medical device companies and healthcare 
        professionals are being inequitably and unfairly squeezed into 
        the economic penalty box as scapegoats in this obvious 
        governmentally enforced transition to an eventual single-payer 
        system.

Since the Simpson and Bowles ``term paper'' re the looming national 
financial crisis, the only strong governmental measure to resolve this 
now unaffordable national debt situation has been Obamacare. This 
stutter stepped healthcare tsunami continues to produce substantial 
uncertainty, economic turmoil, and as a result, significant unavoidable 
headwinds (in the healthcare market; 17% of GDP) for innovation. This 
medical device tax proposal is simply a ``bridge too far.''

    The consolidation among hospitals, the acquisition by these same 
        major hospitals of private medical practices, the restriction 
        of competition by expanding rulemaking in favor of group 
        purchasing organizations, the merger trend among the major 
        corporations in both the medical device arena as well as 
        pharmaceuticals, all severely handicap and thus dis-incent 
        individual (and small company) entrepreneurship and innovation.

    An investment banker, in addressing these very same (industry 
        consolidation) marketing points to my board yesterday, offered 
        three questions which define his life experience in financing 
        new healthcare product investments: ``Can you actually make a 
        [commercial, functioning] product, can you sell the product, 
        and if you can't sell the product, then why make it? '' 
        Otherwise, the new product remains simply a science project.

    With these headwinds, why single out medical devices which account 
        for only 5% of the cost of U.S. healthcare system from all of 
        the other for-profit constituents?

The only conceivable notion for this new medical device tax proposition 
could be that the collective majority judgment by this Congress of a 
likely adverse reaction to this revenue loss burden is that the 
practical repercussions would produce only a negligible political 
fallout. Wrong.

The stakeholders, i.e. investors, patients, healthcare practitioners, 
etc., all recognize the tremendous potential benefit generated by new 
therapies, especially given today's horrific addiction revelations 
associated with regular opioid and NSAID usage. Congress's proposition 
unfairly focuses this medical device tax exclusively on only 5% of the 
total healthcare cost system.

For we entrepreneurs, this medical device tax is certainly a material 
financial burden (i.e. reduced profitability so critical during the 
intense cash burn [before positive flow] in the startup phase). 
Entrepreneurs are the personal risk takers who are currently incubating 
the technological changes so fundamental to the realization of the cost 
reduction and quality of care improvements anticipated in the 
Affordable Care Act. The forecasted decline in NIH funding portends the 
significant need for additional (not less) private ``risk capital.''

I would be pleased to elaborate on this subject, to give my testimony, 
and/or to engage in personal discourse with any Member curious to learn 
what it is like to spend 20 years and $20 million inventing and 
commercializing a scientific concept, only to be bombarded by the now 
ever-increasing adversarial forces of this U.S. government.

Sincerely

John C. Townsend
Chairman
Gradient Technologies LLC
6070 Poplar Ave., Suite 600
Memphis, TN 38119
901-767-2384
[email protected]

                                 ______
                                 
                     Healthcare Leadership Council

April 22, 2015

United States Senate
Committee on Finance Subcommittee on Health Care
219 Dirksen Senate Office Building
Washington, D.C. 20510

Re: Statement for the Record for the Hearing, ``A Fresh Look at the 
Impact of the Medical Device Tax on Jobs, Innovation, and Patients'' 

Dear Chairman Toomey and Ranking Member Stabenow:

On behalf of the Healthcare Leadership Council (HLC), thank you for 
your leadership on the Senate Finance Health Care Subcommittee and for 
your interest in examining the impact of the medical device tax on 
jobs, innovation, and patients.

HLC is a not-for-profit membership organization comprised of chief 
executives of the nation's leading healthcare companies and 
organizations. HLC is committed to advancing a consumer-centered 
healthcare system that values innovation and provides affordable, 
accessible, high-quality healthcare to all Americans. As the only CEO-
level organization spanning all health sectors, HLC has a unique 
ability to speak on the policy implications of proposals for healthcare 
decision-makers. As such, we write to express our concerns about the 
impact the medical device tax has on both patient access to treatment 
and vital sectors of healthcare.

Medical innovation is essential to healthcare value and progress. The 
U.S. has led the global medical device and pharmaceutical industries 
for decades and this leadership has brought hundreds of thousands of 
high-paying jobs to our country and life-saving, life-improving 
technologies to patients. However, taxes and fees imposed on these 
industries through the Affordable Care Act, combined with the lack of 
regulatory consistency, predictability and transparency, hinders 
innovation, hampers job growth, and adversely impacts patient access.

We believe by virtue of our high-level leadership, cross-sector 
collaboration, and real-world experience, HLC and its members can prove 
a valuable resource. We look forward to working with you on this and 
other critical healthcare issues.

Sincerely,

Mary R. Grealy
President

                                 ______
                                 
                        HoverTech International

                         513 S. Clewell Street

                          Bethlehem, PA 18015

                           Phone 800-471 2776

                            Fax 610-694-9601

                           www.HoverMatt.com

                           [email protected]

                                                       May 13, 2015

The Honorable Patrick J. Toomey
Chairman, Senate Finance Subcommittee on Health Care
248 Russell Senate Office Building
Washington, D.C. 20510

The Honorable Debbie Stabenow
Ranking Member, Senate Finance Subcommittee on Health Care
731 Hart Senate Office Building
Washington, D.C. 20510

Dear Chairman Toomey and Ranking Member Stabenow,

I am pleased to submit this statement for the record on behalf of 
HoverTech International.

I want to call your attention to the first article link below. I own 
HoverTech International, a small company that employs 23 in Bethlehem. 
We manufacture a product called the HoverMatt, that is used in 
hospitals to help nurses move patients without injuring their backs or 
hurting the patient. We have saved hospitals millions of dollars in 
workers' comp costs, including many VA facilities. Last year my small 
company paid more than $900,000 due to the Medical Device Tax. Part of 
the initial reasoning to have device companies fund the ACA was that we 
would have many more customers. Our product is strictly used in 
hospitals, and as the article states, they are reducing their number of 
beds due to decreased patient census. So, how is this helping HTI? I am 
paying $1M to reduce my potential customer pool! I would welcome 
testifying in front of a Senate committee, just like the CFO of B. 
Braun did. We have delayed building a new facility for over 2 years 
because of the onerous tax.

Respectfully,

David T. Davis
President/Owner
HoverTech International

http://www.modernhealthcare.com/article/20150221/MAGAZINE/
302219988?utm_
source=modernhealthcare&utm_medium=email&utm_content=externalURL&utm_
campaign=mostreq

                                 ______
                                 
                     LifeScience Alley'

April 23, 2014

Chair Toomey and Members of the Senate Finance Subcommittee on Health 
Care:

Thank you for your leadership in convening this hearing, titled ``A 
Fresh Look at the Impact of the Medical Device Tax on Jobs, Innovation, 
and Patients.'' LifeScience Alley appreciates the opportunity to be on 
the record in support of repealing the medical device tax.

LifeScience Alley represents the most densely concentrated medical 
technology cluster in the world and is home to some of history's 
greatest health technology and care innovations. As the birthplace of 
medical devices, Minnesota's economy has long benefitted from strong 
research-based companies such as 3M, Medtronic, Boston Scientific, St. 
Jude Medical and hundreds of small startups that will bring new 
innovation to the healthcare marketplace.

Supporting the industry's economic strength is critical to Minnesota's 
economy, creating high-paying, knowledge-based jobs. The medical device 
industry in Minnesota accounts for 38,000 direct jobs, with an 
additional 120,000 in indirect jobs, all of which have an average 
salary of $97,500 per employee. Many of these individuals are employed 
at companies that have fewer than 50 employees, which account for about 
80% of the industry, and of these companies, roughly 95% employ 25 or 
fewer people. Small venture capital-backed companies typically spend 
$500,000 to $2 million per month to operate and need at least $100 
million in investments to bring a product to market.

We thank the committee for addressing the medical device tax repeal, a 
critical issue for not only Minnesota, but for the entire industry. The 
federal medical device excise tax continues to stifle innovation in 
Minnesota. In fact, our state pays roughly 25% of the entire medical 
device tax. This is money that could be re-invested in research and 
development or devoted to hiring more Minnesotans into high-paying 
jobs. The medical device tax increases the risk of investment to 
investors, and it is this uncertainty that impedes our companies from 
bringing critical, life-saving therapies to patients worldwide.

Congress must act this year to repeal this egregious tax which is 
stifling innovation not only in Minnesota's Medical Alley but across 
the entire industry nationwide.

Thank you, Mr. Chair, for the opportunity to voice our concern.

Sincerely,

Shaye Mandle
LifeScience Alley, President & CEO

                                 ______
                                 
            Medical Device Manufacturers Association (MDMA)

                     1333 H Street, NW, Suite 400W

                          Washington, DC 20005

                          Phone (202) 354-7171

                           Fax (202) 354-7176

                         www.medicaldevices.org

April 23, 2015

The Honorable Patrick J. Toomey     The Honorable Debbie Stabenow
Chairman                            Ranking Member
U.S. Senate                         U.S. Senate
Committee on Finance                Committee on Finance
Subcommittee on Health Care         Subcommittee on Health Care
248 Russell Senate Office Building   731 Hart Senate Office Building
Washington, DC 20510                Washington, DC 20510

Dear Chairman Toomey and Ranking Member Stabenow,

I write to you today on behalf of the hundreds of companies represented 
by the Medical Device Manufacturers Association (MDMA) offering our 
strong support of 
S. 149, the ``Medical Device Access and Innovation Protection Act.'' 
The medical device excise tax has been a devastating policy for 
patients, innovators and providers for years, and we thank you for 
holding the hearing ``A Fresh Look at the Impact of the Medical Device 
Tax on Jobs, Innovation, and Patients'' to examine how to repeal it 
once and for all.

MDMA represents nearly 300 medical technology companies, and our 
mission is to ensure that patients have access to the latest 
advancements in medical technology, most of which are developed by 
small, research-driven medical device companies.

Since the medical device tax was first proposed in 2009, we shared our 
grave concerns with Congress about what this policy would mean to job 
creation, R&D and patient care. Sadly, much of what we predicted has 
come true.

We have surveyed our members since the device tax became law in 2010, 
and it is clear that this punitive policy has thwarted the ability of 
innovators to deliver on the promises of improved patient care.

In our most recent survey, we asked medical technology executives what 
they would do if the medical device tax was actually repealed. The 
message was loud and clear. The overwhelming majority of medical 
technology innovators would make new investments in R&D and increase 
hiring. The survey consisted of over 100 responses from medical 
technology executives, and the top findings included:

    80% of respondents noted that they would increase R&D investments 
        in the cures and therapies of tomorrow

    When asked how much they would increase their R&D budget, the 
        average increase was 14%

    72% of companies slowed or halted job creation in the United 
        States to pay the medical device tax

    85% of respondents said that if the device tax was repealed, they 
        would hire newemployees in the U.S.

Since enacted in 2010, the medical device excise tax has eliminated 
thousands of good paying jobs, led to drastic cuts to R&D and harmed 
patient care in the United States. According to Ernst and Young, the 
2.3% medical device tax on average increases the effective tax rate for 
America's medical technology innovators by 29 percent.

MDMA strongly believes that the reason for such broad, bipartisan 
support for repealing the medical device tax is the recognition that we 
need to protect and support this proud American success story. At a 
time where we need more high tech manufacturing and solutions to the 
challenges facing the health care system, it is critical that we have 
policies in place that will support innovation, and empower 
entrepreneurs. Repealing the medical device tax will do just that.

MDMA is dedicated to working with Congress and the diverse coalition of 
stakeholders to get repeal of the device tax across the finish line, 
and we thank you for your leadership on this important policy goal.

Sincerely,

Mark B. Leahey
President & CEO, MDMA

                                 ______
                                 
             Medical Imaging and Technology Alliance (MITA)

                   1300 North 17th Street, Suite 900

                       Arlington, Virginia 22209

                           Tel: 703-841-3200

                           Fax: 703-841-3392

                         www.medicalimaging.org

To the Committee on Finance Subcommittee on Health Care, United States 
                                 Senate

   Re: A Fresh Look at the Impact of the Medical Device Tax on Jobs, 
                        Innovation, and Patients

                             April 23, 2015

On behalf of our 56 member companies, the Medical Imaging and 
Technology Alliance (MITA) commend the Senate Finance Committee and 
Health Care subcommittee for conducting today's hearing, ``A Fresh Look 
at the Impact of the Medical Device Tax on Jobs, Innovation, and 
Patients.''

Across the country, the medical device industry is a unique American 
success story--both for patients and our economy. The United States is 
the world leader in manufacturing life-saving and life-enhancing 
treatments, and the industry is an important engine for economic 
growth. MITA believes the medical device tax harms job creation and the 
economy, cannot help but influence heath care innovation decisions, 
negatively impacts the medical imaging industry and therefore should be 
repealed.

The Device Tax Harms Jobs and the Economy

The American medical technology industry provides jobs for over 400,000 
people,\1\ creating a growing trade surplus, and developing the 
technology essential to advancing patient care in the U.S. and around 
the world. The industry generates approximately $25 billion in payroll; 
pays out salaries that are 40 percent more than the national average 
($58,000 vs. $42,000); and invests nearly $10 billion in R&D annually 
by innovative companies, many of which are small businesses (80 percent 
of companies having fewer than 50 employees and 98 percent with fewer 
than 500 employees).\2\ In addition many companies that in the past 
routinely partnered with small start-ups without adequate financial 
resources have slowed or stopped this type of investing. Not only does 
this damage economic development, but it also hinders getting 
innovative diagnostic and therapeutic technologies into the hands of 
physicians to help their patients.
---------------------------------------------------------------------------
    \1\ http://no2point3.com/media/AdvaMed-the-New-Medical-Device-Tax-
Must-Be-Repealed.pdf.
    \2\ http://advamed.org/page/44.

Additionally, global competition has amplified the incentives to 
outsource research and development and move manufacturing abroad. 
Despite these options, many firms have largely resisted the trends seen 
in other manufacturing sectors and maintained successful research 
centers and manufacturing plants in the United States. A $29 billion 
tax burden on these companies amplifies these negative pressures and 
has already forced companies to consider finding savings in their U.S. 
operations to offset this cost.

This Device Tax Stifles Health Care Innovation

The medical imaging industry is in a state of constant innovation that 
each year brings exciting new advances in both reducing radiation dose 
and improving imaging fidelity. These developments have given 
physicians new tools to achieve accurate and early diagnoses that 
improves patient care by likely lessening the intensity of intervention 
and reducing downstream costs to the health care system. Unfortunately, 
this tax impacts the resource decisions that the industry makes 
regarding funding research and development and investing in 
manufacturing. Less investment in R&D slows the pace of innovation and 
postpones patient access to the next generation of care.

The Device Tax Negatively Affects the Medical Imaging Industry

Advocates of the device tax argued that the device tax would complement 
an increase in demand for medical devices due to the Affordable Care 
Act's insurance coverage expansions. In addition, the majority of 
device-intensive medical procedures are performed on older patients 
with existing private insurance or Medicare coverage. Added insurance 
coverage may enable more primary and preventive care. This is good. But 
when Massachusetts instituted universal insurance in 2007, sales of 
medical imaging equipment in the state dropped more than in any other 
state.\3\
---------------------------------------------------------------------------
    \3\ Sorensen, G. (2013). The Medical Device Excise Tax--Over before 
It Begins? New England Journal of Medicine, 369(10), 982-983.

Unlike other devices, imaging equipment is considered infrastructure, 
based in hospitals and physician offices. While many elements of health 
care are intended for use one time for one patient, imaging equipment 
is designed to be used multiple times, on many patients, for multiple 
years. As a result, even if a hospital or doctor's office experiences 
an increase in patients, they will not necessarily purchase additional 
equipment. Despite this key difference, firms manufacturing imaging 
equipment--and other multi-patient devices--are required to pay this 
2.3% tax without a substantial increase in demand for their products.

This Tax Taxes Sales, Not Net Income

As a result, even companies making no profit will pay the tax, which 
makes it harder for entrepreneurs to attract investment required to 
support innovative new companies.

Conclusion

Device tax repeal has received broad bipartisan support because 
Democrats and Republicans both understand the deleterious impact the 
tax is having on job creation, innovation, and research and 
development. That's why a resolution supporting repeal of the tax 
passed the Senate with 79 votes in 2013.

Our collective opposition to the medical device tax is not a commentary 
on broader health reform. The reality is that increased investment in 
medical innovation is a national priority and imposing an excise tax on 
one of the most prolific medical technology industries is counter-
strategic. We respectfully request timely action on legislation to 
repeal this burdensome tax and let us do what we do best: develop 
innovative cutting-edge imaging systems for the good of the millions of 
Americans who need them every year. We thank the committee for 
highlighting this important issue.

                                 ______
                                 
                             NeoTract, Inc.

                      4473 Willow Road, Suite 100

                        Pleasanton, CA 94588 USA

                           Main: 925-401-0700

                     Customer Service: 877-408-9628

                           Fax: 925-401-0696

                            www.neotract.com

The Honorable Orrin G. Hatch        The Honorable Ron Wyden
Chairman                            Ranking Member
U.S. Senate                         U.S. Senate
Committee on Finance                Committee on Finance

Dear Chairman Hatch, Ranking Member Wyden, and Finance Committee 
Members:

On April 23, 2015, you have scheduled a hearing on ``A Fresh Look at 
the Impact of the Medical Device Tax on Jobs, Innovation, and 
Patients.'' I write to explain the impact of the medical device excise 
tax on our company.

NeoTract, Inc. is a small company dedicated to developing innovative 
and effective devices that address unmet needs in the field of urology. 
Our first product the--UroLift System--addresses Benign Prostatic 
Hyperplasia (BPH), a condition affecting approximately 37 million men 
in the United States alone. Symptoms of BPH can cause depression, loss 
of productivity, and decreased quality of life. We employ over 70 
people in California and more than 30 people in other U.S. locations 
and abroad.

NeoTract is at a critical inflection point in the company's life: we 
have recently been cleared by the FDA to sell the UroLift System 
commercially, and our expenses still exceed our revenue. The medical 
device excise tax is already having an adverse impact on our R&D 
investment and our ability to develop a sales force and distribution 
network capable of providing this device to millions of patients in 
need.

The excise tax we will pay in 2015 alone could create as many as 5 
full-time jobs at NeoTract: high-quality U.S. manufacturing jobs, 
engineering jobs, administration jobs, and sales jobs. That is a 5% 
expansion in our work force that we cannot make because of just one 
year's worth of this tax.

Please act quickly to repeal the medical device excise tax.

Respectfully,

Dave Amerson
President and CEO
NeoTract, Inc.

                                 ______
                                 
                    OptiScan Biomedical Corporation
April 22, 2015
Members of the Finance Committee
U.S. Senate
Washington, DC

Dear Senators of the Committee:

My name is Peter Rule, and I have been an entrepreneur leading Medical 
Device companies since 1985. In all, I have led five such companies, 
which today aggregate $2.5 Billion in annual revenues, much of that 
outside of the United States, yet creating high value jobs within the 
U.S. These companies have all pioneered innovating, life saving, and 
cost effective therapies, including:

    external insulin pumps, self blood glucose monitoring, and 
        continuous glucose monitoring systems for the treatment of 
        diabetes,

    embolic protection devices, saving lives in those with diseased 
        Saphenous Vein Bypass Grafts following Coronary Artery Bypass 
        Grafting,

    Clot dissolution devices, treating occlusive clot in the leg and 
        lungs, and

    A Real time diagnostics system for usage in hospitalized ICU 
        patients.

My fifth company (the real time diagnostics company), which I am 
currently leading, is being harmed by the medical device tax, even 
though we are in the midst of a U.S. approval trial, and not yet 
generating revenues. This will likely surprise you.

Medical Device companies in today's financial climate need to achieve a 
minimum of $40M in a calendar year of revenues to be eligible for an 
Initial Public Offering. Achieving $50M in annual revenues is 
preferred. In general, medical device companies are not profitable 
until reaching $50M in annual revenues, with some needing more than 
$100M in yearly revenues to achieve profitability. So, the medical 
device tax's unintended consequence is that one has to raise more money 
while private, at a time when capital is the hardest to gain.

A medical device company located in the U.S. can really raise money 
only in the U.S., with rare exception. The reason is that investors in 
other countries wish to support employment in their country, and, in 
many cases, actually have a restriction on investing outside of their 
country or ``circle.'' Thus, for a U.S. innovative medical device 
company, U.S. investors become the ``gate keeper'' for the funds 
necessary for innovation.

U.S. investors gauge an innovative medical device company largely on 
the underlying medical need, its effectiveness, nearness to U.S. 
approval, and the cash required to become profitable, as the assumption 
is that the IPO market itself is not presently available much earlier 
than that. They heavily discount the potential for OUS approval and 
revenue generation. They do not assume that a company will be acquired 
prior to being eligible for an IPO, as historically this is the case.

Other countries are providing incentive and subsidies for the creation 
of innovative medical device companies . This is common in Israel, S. 
Korea, and China, to name just three. If one looks at tax advantages, 
one easily adds several countries to the list, for example Switzerland.

So, today's U.S. innovative medical device companies are at a strategic 
cross road. We face competitors who have in effect a lower cost of 
capital thru government intervention at a time when we face higher 
costs of innovation through such actions as the medical device tax. It 
is awfully hard to compete under such circumstances.

We need relief from this tax in order to even approach a ``level 
playing field'' for the creation of innovative medical device 
companies.

Thank you for your time and consideration.

Peter Rule
President, CEO, Chairman
OptiScan Biomedical Corporation
24590 Clawitter Road
Hayward, CA 94545
Email: [email protected]
Cell: 650-279-5261

                                 ______
                                 
                 Pennsylvania Biotechnology Association

        The Voice of Advancement for the Life Sciences Industry

                  650 East Swedesford Road, Suite 190

                            Wayne, PA 19087

                            p. 610-947-6800

                            f. 610-947-6801

                             www.pabio.org

Submitted to the United States Senate Committee on Finance Subcommittee 
                             on Health Care

 Hearing on ``A Fresh Look at the Impact of the Medical Device Tax on 
                    Jobs, Innovation, and Patients''

                             April 23, 2015

The Pennsylvania Biotechnology Association (Pennsylvania Bio), the 
statewide trade association for the biotechnology, pharmaceutical, 
medical device and diagnostic manufacturers in Pennsylvania is pleased 
to have this opportunity to share its views on the repeal of the 
medical device excise tax. The life sciences community of Pennsylvania 
includes more than 2,300 individual businesses with $7.2 billion in 
annual wages in the Commonwealth.

Pennsylvania Bio has been on record opposing this excise tax since its 
implementation in January of 2013. This misguided tax, on an industry 
that employs more than 31,000 in Pennsylvania, stifles innovation and 
prohibits further investment in research and development. At a time 
when Congress is working on a bi-partisan, bi-cameral effort to speed 
the development of therapies and medical devices for patients, this tax 
continues to undermine the effort. We thank the 14 Members of Congress 
and both Senators from the Pennsylvania delegation for co-sponsoring 
legislation that would repeal this tax and put job growth back on track 
in Pennsylvania.

A January 2015 nationwide survey of medical device manufacturers by the 
Advanced Medical Technology Association (AdvaMed) found a substantial 
negative impact on jobs and R&D, and identified companies that deferred 
or canceled capital investments, deferred or canceled plans to open new 
facilities, and a reduction in investment in start-up companies. The 
tax resulted in employment reductions of 14,000 industry workers in 
2013, with approximately an additional 4,500 jobs lost in 2014. 
Furthermore, the industry will forgo the hiring of more than 20,000 
employees over the next five years. Considering both jobs lost and jobs 
not created, the tax will result in 39,000 fewer industry jobs.

Pennsylvania Bio appreciates the attention the subcommittee on Health 
Care is bringing to this important issue under the leadership of 
Chairman Pat Toomey and Ranking Member Debbie Stabenow. We are pleased 
with the bi-partisan work in both chambers of Congress and remain 
hopeful this job killing tax policy will be repealed for good. Thank 
you for this opportunity to present our views.

                                 ______
                                 
                PhotoMed Technologies', Inc.

                65 Franciscan Way, Kensington, CA 94707

                            ph: 510-526-7373

                           fax: 510-526-2764

                          www.photomedtech.com

                         [email protected]

April 21, 2015

To the Senate Finance Committee,

RE: Hearing 4/23/2015 on Medical Device Tax on Jobs, Innovations, and 
Patients

This letter supports repeal of the medical device tax to avoid 
unintended consequences for innovators of non-invasive therapies that 
promote healing and relief from disorders having no current solution.

The confiscatory ACA tax extracts its toll from pre-profit companies by 
requiring additional borrowed or invested funds and up to 100% of 
profit in addition to accounting costs.

Why you should care about success for small companies

Do you, your loved ones, or your constituents endure chronic pain or 
impairment of the central or peripheral nervous system? With typical 
maintenance costs to ACA payers of $20K to $50K+ per year for life!

For example, PhotoMed Technologies (currently 5 part-time employees) 
has developed a non-invasive solution for disorders and impairments, 
such as diabetic neuropathy, complex regional pain syndrome (CRPS or 
RSD), stroke or spinal cord spasm or paralysis, an non-healing wounds. 
Specifically, solutions for disorders having NO current solution.

Healing effects are easily documented because relief persists or 
improves after therapy ends. Interventions that must be present to 
maintain effect do not heal.

Since 2000, I personally funded the technical risks for PhotoMed's 
discoveries. Now, our experimental therapy is sufficiently robust for 
the next steps toward commercialization.

Unfortunately, the ACA tax, billing code acquisition, and escalating 
regulatory risks add challenges to fund the next steps. Outside funders 
are considering entirely skipping America. That saddens me because I 
took on this project especially to help my friends and military people 
having NO solution for their pain.

I hope that you and your family never suffer disorders resolved by our 
experimental therapy.

Please end or revise the ACA tax to reduce challenges to the success of 
small stakeholders who offer the hope of healing for future 
generations.

Sincerely,

Allan Gardiner

                                 ______
                                 
     Statement of Mary Woolley, President and CEO, Research!America

           1101 King Street, Suite 520, Alexandria, VA 22314

         Before the United States Senate Committee on Finance 
                      Subcommittee on Health Care

     A Fresh Look at the Impact of the Medical Device Tax on Jobs, 
                        Innovation, and Patients

                             April 23, 2015

Chairman Hatch, Ranking Member Wyden, and distinguished members of the 
Senate Finance Committee:

On behalf of Research!America, the nation's largest non-profit alliance 
committed to making medical progress a top national priority, I 
appreciate this opportunity to comment on the medical device excise 
tax.

The more than 350 members of the Research!America alliance include 
patient advocacy organizations, foundations, research universities, 
academic medical centers, independent research institutes, scientific 
societies, and large and small businesses within the bioscience 
industry. What brings this diversity of organizations together is the 
conviction that faster medical progress should be treated as a national 
strategic imperative. Whether the objective is to advance the 
longevity, productivity, independence and well-being of individual 
Americans, protect our nation from pandemics, bioterrorism and other 
destabilizing population health threats, or foster a strong, globally 
competitive economy, medical progress is pivotal to America's progress.

We believe it is in the nation's best interests to assure that federal 
policies are aligned with the objective of speeding medical progress. 
By dis-incentivizing investment in medical device research and 
development, the medical device excise tax contravenes this basic 
principle. We hope Congress will take bipartisan action as soon as 
possible this year to repeal the medical device tax.

The Role of Medical Devices in Advancing the Health and Well-Being of 
                    Americans

The term ``medical device'' refers to technologies engineered to 
advance and restore health. From stents to wheelchairs to artificial 
organs, devices save lives and work to mitigate the effects of physical 
disabilities. While far from exhaustive, the following examples help 
convey the significance of past--and future--research and development 
in the medical device arena.

    According to a study initiated by the Christopher & Dana Reeve 
        Foundation, nearly 1 in 50 people live with paralysis--
        approximately 6 million people. That's the same number of 
        people as the combined populations of Los Angeles, 
        Philadelphia, and Washington, D.C. Medical devices are the 
        tools used to provide mobility, restore the ability to 
        communicate, and in other fundamental ways enhance autonomy and 
        quality of life for these men, women and children.\1\
---------------------------------------------------------------------------
    \1\ Christopher & Dana Reeve Foundation, Paralysis Resource Center, 
Paralysis Facts & Figures
    http://www.christopherreeve.org/site/c.mtKZKgMWKwG/b.5184189/
k.5587/Paralysis_Facts
__Figures.htm.

    Between 1993 and 2009, 2.9 million patients received permanent 
        pacemakers in the United States. These implanted medical 
        devices, which have been refined significantly over time to 
        dramatically increase safety, efficacy, and patient 
        satisfaction, address disabling and sometimes life threatening 
        irregularities in heart rhythm.\2\
---------------------------------------------------------------------------
    \2\ Arnold J. Greenspon, et al, Trends in Permanent Pacemaker 
Implantation in the United States from 1993 to 2009: Increasing 
Complexity of Patients and Procedures, Journal of the American College 
of Cardiology, Vol. 60, Issue 16 (2012)
    http://www.sciencedirect.com/science/article/pii/S0735109712028100.

    A total of 30 million blood transfusions occur each year in the 
        U.S. Transfusion devices enable these life-saving 
        procedures.\3\
---------------------------------------------------------------------------
    \3\ American Red Cross, Blood Facts and Statistics http://
www.redcrossblood.org/learn-about-blood/blood-facts-and-statistics.

    As of March, 2012, nearly 1,300 service members lost a limb as a 
        result of combat in Operation Enduring Freedom, Operation Iraqi 
        Freedom, or Operation New Dawn; of that number, 359 lost more 
        than one limb. Increasingly sophisticated prosthetic devices 
        play a crucial role in enabling wounded warriors to achieve 
        their personal and professional goals, as do devices that aid 
        in breathing, communication and external mobility. According to 
        a 2014 survey conducted by The Wounded Warrior Project, 7% of 
        wounded warriors are permanently housebound as a result of 
        their injuries. Our nation must continue to research and deploy 
        advanced medical technologies to reduce this alarming and 
        tragic statistic.\4\
---------------------------------------------------------------------------
    \4\ Wounded Warrior Project, 2014 Wounded Warrior Project Survey 
http://www.wounded warriorproject.org/media/691673/2014-wwp-alumni-
survey-report.pdf.
---------------------------------------------------------------------------

The Economic Impact

According to the Advanced Medical Technology Association, the medical 
device industry generates approximately $25 billion in payroll, with 
median salaries 40 percent above the national average, and invests 
nearly $10 billion in R&D annually.\5\ But that is only part of the 
story. As the global economy evolves, export potential in the medical 
device arena will grow. And as the examples above illustrate, medical 
devices play a particularly important role in helping individuals 
overcome physical disabilities that rob them of independence and 
compromise productive capacity. Medical devices can reduce the need for 
caregiver support and empower Americans to return to, or stay in, the 
workforce and maintain healthy, active lifestyles. These tangible and 
intangible economic benefits convey to individuals and society as a 
whole, empowering wounded warriors to provide for their young families 
and older Americans to choose when to retire from the workforce instead 
of being forced by physical limitations to do so.
---------------------------------------------------------------------------
    \5\ Advanced Medical Technology Association (AdvaMed), http://
advamed.org/.
---------------------------------------------------------------------------

The Case for Repealing the Medical Device Excise Tax

The reasoning that underlies our support for repealing the excise tax 
is straightforward: Because the excise tax reduces the return on 
investment in new medical devices, it decreases the capital available 
for medical device R&D and tilts investment decisions within the device 
arena toward lower risk, higher return R&D. Given the enduring value of 
breakthrough medical devices, neither outcome is a desirable one.

Concerns have been raised that repealing the medical device tax would 
jeopardize continued implementation of the Affordable Care Act (ACA). 
However, revenues generated from the medical device tax are not 
earmarked for a specific purpose; they flow into the federal treasury 
and are fungible. The future of the ACA is a critically important 
issue, but it should be de-linked from decisions regarding the future 
of the medical device tax.

Conclusion

Medical device R&D drives medical progress in profoundly important 
ways. By increasing the attractiveness of investment in medical 
devices, repealing the medical device excise tax is a pragmatic means 
of putting more medical innovation to work for Americans. 
Research!America is grateful to the Committee for holding today's 
hearing, and hope that your deliberations help lay the groundwork for 
bipartisan action to repeal the tax as soon as possible this year.

                                 ______
                                 
                     RoundTable Healthcare Partners

        272 East Deerpath Road, Suite 350, Lake Forest, IL 60045

               Phone: (847) 739-3200 Fax: (847) 482-9215

                          www.roundtablehp.com

April 21, 2015

The Honorable Patrick J. Toomey
Chairman
U.S. Senate
Committee on Finance
Subcommittee on Health Care
248 Russell Senate Office Building
Washington, DC 20510

The Honorable Debbie Stabenow
Ranking Member
U.S. Senate
Committee on Finance
Subcommittee on Health Care
731 Hart Senate Office Building
Washington, DC 20510

Dear Chairman Toomey and Ranking Member Stabenow,

The medical device tax is having a series of unintended consequences on 
small to medium-sized medical device companies. A 2.3% tax on revenue 
is devastating for a number of reasons. First off, it can mean an 
effective tax rate for smaller companies of well over 50% when one 
considers federal, state and device taxes. This increase of ``cash 
out'' to pay taxes is costing our industry and our country jobs and 
innovation. The jobs issue is obvious, as we have begun to move real 
``over minimum wage'' jobs out of Waltham Mass. to the Dominican 
Republic. The cost is a fraction of the U.S. costs and the labor force 
is more than adequate. We have also added a new plant in Juarez, Mexico 
taking jobs from northern California just to give you two real life 
examples affecting almost 500 U.S. jobs. This is being done in large 
part to cover the increased costs the tax has created. If we don't stay 
competitive, there won't be any jobs for our company, regardless of the 
location.

Let me briefly speak about innovation. A large portion of true medical 
device innovation comes from the small companies that ultimately sell 
or license their new technology to big medical companies. This 
incremental tax many times equates to the cost of an engineer, 
researcher, or lab tech which would have to be let go or simply not 
hired to pay for this tax. Many people think of the large multi-
national companies when they think of the medical device industry. They 
do play a significant role but the real bread and butter of the 
industry are the thousands of small device companies that have been the 
heart and soul of our industry for decades. This tax is 
disproportionally affecting the small to medium sized companies 
struggling to stay afloat in this time of increased regulation and 
taxation.

I still want to believe that all branches of our government want to do 
the ``right'' thing for our country as a whole, but it is past time to 
admit a mistake, fix it and move on. We do this in our company 
frequently, it is not a sign of weakness to acknowledge that something 
didn't work out as originally planned, but rather it is a sign of 
strength to do something about it in a timely manner.

It is time to REPEAL the medical device tax regardless if there is a 
corresponding offset or not. Congress (both parties) and the President 
need to stand up do the right thing for the right reason not just what 
is politically expedient and fix this problem NOW. Obviously this is a 
great industry in an even greater country, let's not let there be any 
more governmental incentives to move jobs or innovation dollars off of 
our shores.

Respectfully submitted,

Joseph F. Damico
Founding Partner and Co-Chairman

                                 ______
                                 
                    Submitted by Siemens Healthcare

      From the New England Journal of Medicine, September 5, 2013

         The Medical Device Excise Tax--Over before It Begins?
TO THE EDITOR: The Perspective article by Kramer and Kesselheim (May 9 
issue) \1\ contains factual errors about the medical device tax that 
could lead to critical policy blunders.
---------------------------------------------------------------------------
    \1\ Kramer DB, Kesselheim AS. The medical device excise tax--over 
before it begins? N Engl J Med 2013;368:1767-1769.

    First, the claim that ``purchases by government agencies and 
nonprofit institutions'' are exempted from the tax is incorrect. 
Section 2 of the law specifically excludes some typical exemptions 
(e.g., sales to governmental and nonprofit agencies) from the tax. 
---------------------------------------------------------------------------
Therefore, those sales are taxable.

    Second, the claim that broadening insurance coverage, ``including 
appropriate use of medical imaging and other diagnostic tools, would 
translate to enhanced sales for many device companies,'' is incorrect. 
The opposite is true: added coverage should enable more primary and 
preventive care, leading to reductions in utilization of imaging. The 
implementation of ``Romneycare'' in Massachusetts in 2007 has shown 
this to be the case. Sales of medical-imaging equipment in that state 
have dropped more than they have in the rest of the country and have 
not recovered (Fig. 1). Medical device manufacturers will already be 
paying dearly for the Affordable Care Act (ACA) through reduced sales, 
even without the tax.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Third, the claim that job reductions cannot be traced to this tax 
is incorrect. As an executive responsible for such decisions, I can 
assure readers that this tax has led to a decrease of hundreds of 
research-and-development jobs at my company. I have already been forced 
to lay off workers as a result of the tax. Furthermore, the math that 
is laid out by the authors belies their assertion: If 7 to 8% of sales 
are spent on research and development, as the article states, then the 
2.3% tax on sales represents more than a quarter of research-and-
development budgets.

    Fourth, claims that repealing the medical device tax would have an 
effect on the health insurance provisions of the ACA are incorrect. The 
added revenue merely helped offset the cost of the bill, very much as 
occurred with the Community Living Assistance Services and Supports 
(CLASS) Act, an original provision of the ACA that was repealed earlier 
this year after it was determined to be unworkable. Repeal of the 
device tax would not impede the ACA, and 79 senators, including staunch 
supporters of the ACA, recently voted for repeal.

    And finally, recent data highlight that diagnostic errors are the 
most common, most deadly, and most costly of medical 
errors.\2\, \3\ Yet, the tax discourages accurate diagnosis. 
In some ways, taxing the very devices that can facilitate discovery is 
similar to establishing a tax on supercomputers while attempting to 
sequence the human genome. Policies should be aimed at encouraging, not 
discouraging, society to put resources into improved diagnosis.
---------------------------------------------------------------------------
    \2\ Saber Tehrani AS, Lee H, Mathews SC, et al. 25-Year summary of 
U.S. malpractice claims for diagnostic errors 1986-2010: an analysis 
from the National Practitioner Data Bank. BMJ Qual Saf 2013;22:672-680.
    \3\ Misdiagnosis is more common than drug errors or wrong-site 
surgery. Washington Post. May 3, 2013
    (http://www.washingtonpost.com/national/health-science/
misdiagnosis-is-more-common-than
-drug-errors-or-wrong-site-surgery/2013/05/03/5d71a374-9af4-11e2-a941-
a19bce7af755_story_2.
html).

---------------------------------------------------------------------------
A. Gregory Sorensen, M.D.

Siemens Healthcare
Malvern, PA
[email protected]

_______________________________________________________________________

TO THE EDITOR: Regarding the Perspective article on the medical device 
excise tax, three additional points deserve attention. First, since the 
expanded coverage in the ACA is skewed toward younger patients who are 
less likely to require medical devices for their care, the promise of 
enhanced device sales may be overstated.\1\ For example, similar 
legislation that was passed in Massachusetts in 2006 has not resulted 
in a convincing spike in device sales.\2\ Second, since the tax is 
levied on sales rather than profits, it could have a disproportionate 
effect on startup companies that are trying to bring new products to 
the market, which could affect treatment options for 
patients.\3\, \4\ Third, the cost of medical devices to 
hospitals is based on negotiated contracts; companies will probably not 
be able to completely pass on the tax to consumers. Funding the ACA is 
vital, but arbitrary approaches to revenue generation could have 
unintended consequences. Therefore, the true costs of the medical 
device excise tax to device companies and patients remain uncertain.
---------------------------------------------------------------------------
    \1\ Dolan M. Innovation 101--technology and innovation in the 
medical device industry. Newport Beach, CA: ROTH Capital Partners, 
September 13, 2012
    (http://www.roth.com/files/marketing/email_blasts/
Roth%20Capital%20CONNECT.pdf).
    \2\ Torres C. U.S. health reform burden falls on medical devices. 
Nat Med 2010;16:500-500.
    \3\ Medical device tax would mostly hit the biggest firms. MedCity 
News. March 24, 2010 (http://medcitynews.com/2010/03/medical-device-
tax-would-mostly-target-the-biggest-compan
ies).
    \4\ Weaver C. Excise tax remains for medical device makers. Wall 
Street Journal. June 28, 2012 (http://online.wsj.com/article/
SB10001424052702304441404577480972664688712.html).

Anand M. Prabhakar, M.D.
H. Benjamin Harvey, M.D., J.D.
Rahmi Oklu, M.D., Ph.D.

Massachusetts General Hospital
Boston, MA
[email protected]

    No potential conflict of interest relevant to this letter was 
reported.

_______________________________________________________________________

TO THE EDITOR: Contrary to the views of Kramer and Kesselheim, repeal 
of the medical device excise tax has nothing to do with health policy, 
and the negative effects of the tax are not merely ``unproven 
assumptions.'' When enacted, the tax was used in a bookkeeping sense to 
offset some of the costs of the ACA, but it is now simply part of U.S. 
general revenue.\1\ Repealing it will have zero effect on programs 
authorized by the ACA. The tax makes the already uncompetitive U.S. tax 
system even more uncompetitive by raising the industry's tax burden by 
29%.\2\ Thousands of workers have already been laid off because of the 
tax, and two separate studies have estimated potential job losses of 
40,000 or more.\3\, \4\ Moreover, the tax will cut research-
and-development investment by an estimated $2 billion per year, meaning 
less medical progress for patients.\5\ The bottom line is that repeal 
of the tax is not a retreat from health reform but is essential to 
America's continued leadership in medical technology.
---------------------------------------------------------------------------
    \1\ Health Care and Education Reconciliation Act of 2010 Sec. 1405, 
26 U.S.C. Sec. 4191 (2010).
    \2\ Effect of the medical device excise tax on the federal tax 
liability of the medical device industry. Ernst & Young, November 2012 
(http://advamed.org/res/14/effect-of-the-medical-device-excise-tax-on-
the-federal-tax-liability-of-the-medical-device-industry).
    \3\ Furchtgott-Roth D, Furchtgott-Roth H. Employment effects of the 
new excise tax on the medical device industry. California Healthcare 
Institute, September 2011 (http://www.chi.org/uploadedFiles/
Industry_at_a_glance/090711EmploymentEffectofTaxonMedicalDeviceIndustry
FINAL.pdf).
    \4\ The economic impact of the U.S. advanced medical technology 
industry. Battelle Technology Partnership Practice, March 2012 (http://
www.chi.org/uploadedFiles/Industry_at_a_glance/
BattelleFinalAdvaMedEconomicImpactReportMarch2012.pdf).
    \5\ Zycher B. ObamaCare's tax on medical devices: cuts R&D by $2 
billion a year. Pacific Research Institute, May 2012.

Stephen J. Ubl
Advanced Medical Technology Association (AdvaMed), Washington, DC

    Mr. Ubl reports being an employee of Advanced Medical Technology 
Association. No other potential conflict of interest relevant to this 
letter was reported.
_______________________________________________________________________

THE AUTHORS REPLY: Sorensen and Ubl repeat common rhetoric surrounding 
the medical device excise tax. Despite their references to anecdotal 
claims and industry reports, we remain skeptical that this tax will 
have the effects they claim on personnel decisions, the international 
competitiveness of the U.S. device industry, or innovation. Indeed, we 
agree with Prabhakar and colleagues that the true effects of the 
medical device excise tax on patients and industry remain to be seen, 
and we look forward to independent, rigorous research in this area.

    Sorensen's points regarding the use of imaging in Massachusetts do 
not support his conclusions. First, imaging is only one component of 
the entire medical device sector. Second, other changes in the health 
care market in Massachusetts and elsewhere during recent years may have 
influenced the utilization of imaging, including payment reform \1\ and 
uptake of strict conflict-of-interest policies at Massachusetts 
academic medical centers, which insulate physicians from industry-
related marketing of services,\2\ both of which are unrelated either to 
excise taxes or insurance coverage. Third, regional differences in 
health care utilization in general and in utilization of high-cost 
elements in particular challenge extrapolations from Massachusetts 
alone.\3\ Sorensen's prediction about the effects of the ACA is also 
undermined by evidence from an ongoing randomized natural experiment in 
Oregon, which showed that expanding insurance coverage led to enhanced 
utilization of at least one type of imaging, since the use of 
mammography in women who were 50 years of age or older increased by 
nearly 30%.\4\
---------------------------------------------------------------------------
    \1\ Ginsburg PB. Achieving health care cost containment through 
provider payment reform that engages patients and providers. Health Aff 
(Millwood) 2013;32:929-934.
    \2\ Kesselheim AS, Robertson CT, Siri K, Batra P, Franklin JM. 
Distributions of industry payments to Massachusetts physicians. N Engl 
J Med 2013;368:2049-2052.
    \3\ Report to the Congress: regional variation in Medicare service 
use. Washington, DC: Medicare Payment Advisory Commission, 2011 (http:/
/www.medpac.gov/documents/Jan11K_ RegionalVariationK_report.pdf).
    \4\ Baicker K, Taubman SL, Allen HL, et al. The Oregon experiment--
effects of Medicaid on clinical outcomes. N Engl J Med 2013;368:1713-
1722.

    We appreciate Sorensen's clarification that sales to government and 
nonprofit entities, which ordinarily are exempt from taxation, are not 
exempt from this specific excise tax. This point has been clarified in 
---------------------------------------------------------------------------
the online version of our article.

Daniel B. Kramer, M.D.
Beth Israel Deaconess Medical Center
Boston, MA

Aaron S. Kesselheim, M.D., J.D.
Brigham and Women's Hospital
Boston, MA

    Since publication of their article, the authors report no further 
potential conflict of interest.

                                 ______
                                 
               The Spectranetics' Corporation

April 23, 2015

The Honorable Patrick J. Toomey     The Honorable Debbie Stabenow
Chairman                            Ranking Member
U.S. Senate                         U.S. Senate
Committee on Finance                Committee on Finance
Subcommittee on Health Care         Subcommittee on Health Care
 248 Russell Senate Office Building 731 Hart Senate Office Building
Washington, DC 20510                Washington, DC 20510

Dear Chairman Toomey and Ranking Member Stabenow:

The Medical Device Tax is much larger than a ``profits bill'' before 
Congress--it's about realizing our potential as a world power, 
economically and through medical advancement. The debate is grounded in 
fierce conversations that impact jobs, innovation, education, health 
care and building on America's leadership position globally.

Spectranetics, a Colorado-based clinical solutions company, is 
committed to saving lives and limbs by developing, manufacturing and 
marketing medical devices that address the most challenging 
cardiovascular conditions of our time. We employ 830 globally and serve 
65 countries worldwide. In the last 2 years, we received 140 regulatory 
approvals in 18 countries across four continents. We live for the next 
discovery and the next life saved.

We, our industry and our health care system, share a common goal--
better care, lower costs and improved access.

I applaud the Senate Finance Committee for hosting a hearing on the 
impact of the Medical Device Tax on patients, innovation and jobs. We 
understand that the Committee is currently reviewing the repeal of the 
Medical Device Tax, a part of the Affordable Care Act, which levies a 
2.3% tax on gross sales of all medical equipment sold in the United 
States. On behalf of Spectranetics, I urge you to take direct action 
and vote for the repeal.

In Colorado alone, the medical technology sector employs roughly 10,000 
individuals. The average yearly wage of medical technology sector 
employees is $74,000 with an annual payroll impact of $732 million. 
Bioscience products, Colorado's leading export, accounted for 17% of 
2013 exports. Bottom line, the industry is vital to Colorado's economy.

I want to thank Colorado Senators Michael Bennet and Cory Gardner, who 
have expressed support for the repeal. At a time when it seems as if no 
one agrees on anything, I'm pleased to speak on behalf of a state that 
is working together to maintain the United States' global foothold as a 
leader in biosciences and medical technology.

Increasingly, bioscience companies are shipping manufacturing and 
clinical jobs overseas. It is imperative that the United States 
preserve and enhance an industry that is clean, sustainable and leads 
to better and longer lives for millions of patients. It exemplifies 
what American health care reform is all about and is, indeed, critical 
to maintaining our leadership position as a country and our commitment 
to accessible, affordable care for all.

The Medical Device Tax is levied on gross sales, not on profits. This 
means a business can actually owe taxes before ever earning a dollar in 
profit. The tax will effectively consume 65% of the average device 
maker's already-narrow 3.4% average profit margin. Over the next 
decade, the cost to manufacturers is estimated at $20 billion.

At Spectranetics, we anticipate that the Medical Device Tax will result 
in a payment of about $4 million in 2015. Ironically, we will be forced 
to redirect funds destined to reduce the cost of health care through 
research and development, clinical trials and business expansion to pay 
the tax. The tax, as well as other roadblocks to innovation within the 
Colorado bioscience community, was highlighted by the Denver Business 
Journal recently and noted as a threat to our regional and national 
economy.

According to the Medical Device Manufacturers Association (MDMA), there 
are no data or studies to suggest that the cost of this ``innovation 
tax'' will be offset by a larger pool of insured people receiving 
treatment, particularly for companies producing acute care products.

The medical device ecosystem is noteworthy for the volume of start-up 
activity it produces. Eighty percent of medical device makers have 
fewer than 50 employees--they are the entrepreneurs and innovators 
responsible for the lion's share of the health care breakthroughs that 
keep America on the leading edge of the medical device field. The 
results of the tax are devastating to small business and patient care; 
a decrease in dollars going to venture capital-backed medical device 
companies, the lifeblood of innovation, is more severe than any time in 
the last 30 years. Now is not the time to stifle the industry with 
misplaced tax burden.

The medical device industry is a unique American success story--both 
for patients and our economy. The United States is the world leader in 
manufacturing lifesaving and life-enhancing health care solutions, and 
the industry is an important engine for economic growth. It is critical 
that we work together to fuel its future.

Sincerely,

Scott Drake
President & CEO
The Spectranetics Corporation

                                 ______
                                 
                     3D Medical Manufacturing, Inc.

April 21, 2015

The Honorable Patrick J. Toomey
Chairman
U.S. Senate
Committee on Finance
Subcommittee on Health Care
248 Russell Senate Office Building
Washington, DC 20510

The Honorable Debbie Stabenow
Ranking Member
U.S. Senate
Committee on Finance
Subcommittee on Health Care
731 Hart Senate Office Building
Washington, DC 20510

Dear Chairman Toomey and Ranking Member Stabenow

Re: Repeal of Medical Device Tax

Please communicate to the committee that I support the repeal of the 
medical device tax. Here is what the device tax does for America:

    It motivates device companies to purchase their products in China 
        and LCC as opposed to being manufacturing in America, so they 
        can save or recoup the money they are paying out in additional 
        device taxes; this puts small companies out of business.

    It motivates them to move corporate headquarters out of America to 
        save on other taxes.

    We need American manufacturing jobs, additional taxes kill 
        American jobs.

    With more manufacturing jobs we are not so dependent on a consumer 
        economy.

    If you need to pay for healthcare put the tax on fast food, 
        alcohol, and tobacco companies that sell the products that make 
        people unhealthy.

    We need to preserve the few manufacturing sectors we have left in 
        America.

It baffles me why this logic is hard for some educated people in 
government to understand.

Thank you for your support to repeal this tax.

Joe Davis
3D Medical Manufacturing, Inc.
1006 W. 15th Street
Riviera Beach, FL 33404

[email protected]

                                 ______
                                 
                        U.S. Chamber of Commerce
_______________________________________________________________________

   ON: A Fresh Look at the Impact of the Medical Device Tax on Jobs, 
                        Innovation, and Patients

     TO: U.S. Senate Committee on Finance Health Care Subcommittee

                           DATE: May 1, 2015

*Q04___________________________________________________________________

                 1615 H Street, NW, Washington DC 20062

The Chamber's mission is to advance human progress through an economic,

        political and social system based on individual freedom,

         incentive, initiative, opportunity and responsibility.

The U.S. Chamber of Commerce, the world's largest business federation 
representing the interests of more than three million businesses and 
organizations of every size, sector, and region, appreciates this 
opportunity to provide a statement for the record as part of the 
Committee on Finance Health Care Subcommittee's April 23, 2015, hearing 
titled ``A Fresh Look at the Impact of the Medical Device Tax on Jobs, 
Innovation, and Patients.'' The Chamber and its members continue to 
strongly support repeal of the medical device tax and we have 
summarized our concerns, and the concerns of the employer community, 
below for the record.

The Chamber is dedicated to promoting, protecting, and defending 
America's free enterprise system. More than 96% of Chamber member 
companies have fewer than 100 employees, and many of the nation's 
largest companies are also active members. We are therefore cognizant 
not only of the challenges facing smaller businesses, but also those 
facing the business community at large. Besides representing a cross-
section of the American business community with respect to the number 
of employees, major classifications of American business--e.g., 
manufacturing, retailing, services, construction, wholesalers, and 
finance--are represented.

The Medical Device Tax Undermines Health Care Reform

Since the legislative debates before the passage of the Affordable Care 
Act (ACA), the Chamber has testified \1\ on the myriad of challenges 
the ACA poses to the business community through its mandated benefits, 
the imposition of taxes and penalties, and other burdensome 
requirements. Instead of controlling costs, the law decreases the 
flexibility employers and their workers have to access affordable and 
quality coverage. As the Chamber has reiterated in both testimony and 
letters to Congress, this new 2.3 percent tax on the sale of almost all 
medical devices will harm the ability of American companies to 
compete.\2\ The tax will undermine America's global leadership position 
in product innovation, clinical research, and patient care. This tax 
weakens the medical device industry's ability to create and maintain 
well-paying jobs in the United States and hinders the development of 
breakthrough treatments.
---------------------------------------------------------------------------
    \1\ See ``Health Reform in the 21st Century: Proposals to Reform 
the Health System,'' The House Committee on Ways and Means, June 24, 
2009; ``Roundtable Discussion--Health Care Reform Legislative 
Options,'' The Senate Health, Education, Labor and Pensions Committee, 
June 11, 2009.
    \2\ See, e.g., ``The Challenges Facing America's Businesses under 
the Patient Protection and Affordable Care Act,'' The House Energy and 
Commerce Committee Subcommittee on Oversight and Investigation, June 
26, 2013, available at:https://www.uschamber.com/sites/default/files/
documents/files/
Katie%2520Mahoney%2520Testimony%25206%252026%252013%2520Challenge
s%2520Facing%2520America%2527s%2520Businesses%2520under%2520the%2520PPAC
A.pdf; Josten, R. Bruce (Letter to Representatives Erik Paulsen and Ron 
Kind), ``H.R. 523--Protect Medical Innovation Act,'' Feb. 8, 2013, 
available at:
    https://www.uschamber.com/sites/default/files/documents/files/
130208_HR523_ProtectMed
icalInnovationAct_Paulsen_Kind.pdf.
---------------------------------------------------------------------------

The Medical Device Tax is Already Costing Jobs and Stifling Innovation

The medical device industry, which adds over $23 billion to the 
American economy annually, has already felt the impact of the medical 
device tax on jobs and innovation since its January 1, 2013, 
implementation.\3\ According to a recent survey by the Advanced Medical 
Technology Association (AdvaMed), two-thirds of the companies surveyed 
reported that they have had to ``slow or halt U.S. job creation as a 
result of the tax.'' \4\ A recent survey by the Medical Device 
Manufacturers Association (MDMA) of 100 industry executives found that 
72 percent ``slowed or halted job creation'' to pay for the tax, and 85 
percent would hire more workers if the tax were repealed.\5\ The 
AdvaMed survey also found that the medical device tax has resulted in:
---------------------------------------------------------------------------
    \3\ Mary Kate Hays, Medical Technology Adds $23.6 Billion Annually 
to Economy, U.S. Chamber of Commerce Blog, July 18, 2014,
    https://www.uschamber.com/blog/medical-technology-adds-236-billion-
annually-economy.
    \4\ AdvaMed, Impact of the Medical Device Tax: A Status Report from 
AdvaMed (Jan. 2015), available at http://advamed.org/res.download/835.
    \5\ Sean Hackbarth, New York Times Avoids Mentioning the Damage 
Caused by the Medical Device Tax, U.S. Chamber of Commerce Blog, Feb. 
2, 2015,
    https://www.uschamber.com/blog/new-york-times-avoids-mentioning-
damage-caused-medical-device-tax.

    Employment reductions of 14,000 industry workers in 2013 and years 
        prior to implementation of the tax;
    An estimated 4,500 jobs lost in 2014;
    Almost 20,500 employees that will not be hired over the next five 
        years;
    About 39,000 fewer industry jobs (considering both jobs lost and 
        jobs not created); and
    Up to 156,000 jobs lost in indirect employment, leading to a total 
        job loss of 195,000 jobs.\6\
---------------------------------------------------------------------------
    \6\  AdvaMed, supra note 4.

Similarly, the effect of the medical device tax on current and future 
innovation has been equally as alarming. The AdvaMed survey found that 
53 percent of respondents have reduced research and development as a 
---------------------------------------------------------------------------
result of the tax and 75 percent said they have:

    Deferred or cancelled capital investments and plans to open new 
        facilities;
    Reduced investment in start-up companies;
    Found it more difficult to raise capital (among start-up 
        companies); and
    Reduced or deferred increases in employee compensation.\7\
---------------------------------------------------------------------------
    \7\ Id.

While studies and survey results have shown the aggregate effects of 
the medical device tax, many companies have voiced the unique 
challenges they have dealt with because of this onerous tax. As Dr. 
Gregory Sorensen, President and CEO of Siemens Healthcare North 
America, recently explained, businesses often have no choice but to lay 
off employees and reduce research and development when dealing with 
such a heavy tax: \8\
---------------------------------------------------------------------------
    \8\ Michael Bassett, Siemens' Sorensen describes impact of the 
medical device tax, RadiologyBusiness.com, Feb. 10, 2015,
    http://www.radiologybusiness.com/topics/policy/siemens-sorensen-
describes-impact-medical-device-tax?page=0%2C0.

        I personally have had to let people go as we have had to 
        eliminate jobs. For example, we have a factory in Walpole, 
        Mass., where we make point-of-care devices, such as those to 
        manage conditions like diabetes. . . . In Walpole, when this 
        tax hit, we had to cancel projects, and we laid people off. And 
        that's just one factory. At dozens of our other factories 
        around the world we have similar stories, whether it is MRI 
        scanner advances that are delayed, or new types of diagnostic 
        devices for testing, or developments to reduce X-ray dose. When 
        this heavy of a tax hits us, we have very little recourse other 
        than to reduce our spending. Some of that involves cutting back 
        on research and development, and some of that is reducing 
        employees. It's a very painful process for us and is something 
---------------------------------------------------------------------------
        that our country neither needs nor wants.

In his statement for the record, Christopher Cerone, Vice President of 
Global Government Affairs for Zimmer, an orthopedic medical device 
company based in Indiana, described how the medical device tax is 
affecting Zimmer's operations worldwide:

        Medical device companies, such as Zimmer, continue to take 
        significant steps to offset the bottom-line impact of the tax, 
        including restructuring global operations and diverting capital 
        away from key projects and investments. For instance, as a 
        recent AdvaMed survey noted, many medical device companies are 
        scaling back R&D initiatives. Passing on the cost of the tax is 
        simply not an option, given the tight reimbursement environment 
        for our consumers.

Cook Group, Inc., the largest family-owned medical device manufacturer 
in the world, detailed in its written testimony for the record similar 
challenges as they deal with how to continue product innovation in this 
tax environment:

        Cook has made the difficult decision that without repeal, we 
        will move important new, device-related product lines outside 
        of the U.S. Our previous plans to open up five new device 
        manufacturing facilities in American towns continue to be on 
        hold as we use capital intended for these projects to pay the 
        excise tax. The direct impact of this tax is squarely on U.S. 
        jobs and because device manufacturing is performed mainly by a 
        female workforce in many sectors, it will hit these workers the 
        hardest.

OrthoPediatrics, the world's only company specializing in making 
orthopedic equipment for children, has had to slow hiring and 
development as a result of the medical device tax. As CEO Mark Throdahl 
explained: \9\
---------------------------------------------------------------------------
    \9\ Patrick Howley, Company that makes medical equipment for kids 
hit hard by Obamacare, The Daily Caller, Feb. 25, 2014, available at 
http://dailycaller.com/2014/02/25/company-that-makes-medical-equipment-
for-kids-hit-hard-by-obamacare/.

        We are a company that is not yet profitable. We've only been in 
        the market for 5 years. This is a very burdensome tax because 
        it is based on sales, not profits, and the only way we can pay 
        a tax like this is to cut expenses. . . . In terms of 
        magnitude, [the tax] is about the size of our entire product 
        development budget. We have had to reduce our development 
        budget. We're developing less products than we otherwise would. 
        It has cut into our development expenses. The only way we can 
---------------------------------------------------------------------------
        trump up the money to pay this tax is to reduce expenses.

According to M&S Technologies Inc., a company that develops and 
manufactures computerized vision testing products, the medical device 
tax has even hurt their ability to donate resources to children in need 
of specialized care:

        Prior to the medical device tax, M&S Technologies actively 
        participated in donating technology and other resources to 
        assist in vision screening for children who may not have access 
        to vision care. Our sponsorship of the Special Olympics, 
        Children's Calendar fundraisers and other events have all been 
        eliminated due to the medical device tax of which we paid over 
        $100,000 in 2014. The tragedy of all of this is that those kids 
        who were at least getting some form vision testing are no 
        longer receiving that service due to our cuts in our 
        philanthropic activities due to the medical device tax, 
        especially knowing that 80 percent of all eye problems in 
        children are solvable before the age of 8-10.

The Medical Device Tax Needs to be Repealed

    As we continue to see the destructive effects of the medical device 
tax hit employers, employees, and the U.S. economy at large, the 
Chamber urges swift bipartisan and bicameral action to repeal this tax 
before further damage is done. Legislation in both the House and the 
Senate has been introduced to repeal the medical device tax \10\ and we 
encourage you and your colleagues to support these bills. The Chamber 
thanks you for taking the time to hold this important hearing on the 
ongoing impacts of the medical device tax on jobs, innovation, and 
patients. We look forward to working with you as you continue to 
examine this important issue. Please do not hesitate to contact us if 
we may be of assistance in this matter.
---------------------------------------------------------------------------
    \10\ Protect Medical Innovation Act of 2015, H.R. 160, 114th Cong. 
(2015); Medical Device Access and Innovation Protection Act, S. 149, 
114th Cong. (2015).

                                 ______
                                 
                               Vapotherm

            22 Industrial Drive, Exeter, New Hampshire 03833

                     T 603-658-0011 F 603-658-0181

                             www.vtherm.com

April 22, 2015

To Whom It May Concern:

Our Company, based in Exeter, NH, manufactures an advanced respiratory 
support technology that offers substantial clinical and economic 
benefits to patients, caregivers and payors. To achieve our guiding 
principle of Total Customer and Patient Focus, we must invest in 
attracting, developing and retaining the Very Best People in the 
Medical Device Industry. We make investments in our People through the 
development programs that are accessible to them, the projects they 
work on to advance their experiences and careers and the product they 
develop, assemble and sell to improve the care and quality of life for 
patients across the country. We currently employ 122 people, up from 46 
people 3 years ago and have grown our revenues by 28% over the past 2 
years.

We are a privately held, venture backed Company poised for rapid 
growth. Our latest fundraising round was completed last month. Not yet 
being profitable means accessibility to capital is critical to our 
success. Once we become profitable, which will now take longer due to 
the medical device excise tax, we will reinvest back into our business 
to fund innovation thereby leading to job creation and an expanded 
portfolio of products to serve patients in respiratory distress. Since 
the adoption of the medical device tax, we have seen a reduction in the 
number of venture capital firms investing in the medical device space 
as the excise tax has squeezed the industry's profit margins and hence 
better returns can be found elsewhere, including overseas. Reduced 
access to capital will severely limit medical device innovation in this 
country.

Since adoption of the tax, we've made medical device excise tax 
payments amounting to $514,555, excluding compliance related costs. 
That money would have been used to accelerate new product development 
to stay ahead of foreign based competition, expand our sales presence 
and augment the benefits package we offer to our employees. I 
consistently share with our team that they do ``work that matters'' and 
I share this brief background to express how the Medical Device Tax has 
hindered the growth that is so critical to our people and the work that 
they do.

As part of the medical device community, we work diligently to improve 
the lives of others, and to do so within our great country is an honor. 
We are proud of the work we do, the Company we are building and the 
country we are doing it within. We hope to see the medical device 
excise tax repealed to allow us to innovate, enterprise and compete on 
a global playing field.

Great People + Total Customer Focus + Great Technology = Success

Sincerely,

Joseph F. Army
President & CEO

                                 ______
                                 
                            Welch Allyn Inc.

            Senate Finance Committee Subcommittee on Health

    ``A Fresh Look at the Impact of the Medical Device Tax on Jobs, 
                       Innovation, andPatients''

                        Thursday, April 23, 2015

    Welch Allyn applauds the Senate Finance Committee for taking a 
renewed look at the impact of the medical device excise tax on device 
manufacturers, innovation, and patients. Repeal of the medical device 
tax remains a top priority for Welch Allyn, a privately-held 
manufacturer of innovative medical devices, products and solutions used 
by caregivers in doctors' offices, hospitals, and emergency response 
settings around the world. Headquartered in Skaneateles Falls, New 
York, Welch Allyn celebrates 100 years of family ownership in 2015 with 
over 2,400 employees working in 17 different countries.

    The tax--on revenues, not profits--raises the total amount of 
federal taxes paid by medical device manufacturers by almost 30 
percent. The industry is fueled by innovative companies, the majority 
of which are small businesses, with 80 percent of medical device 
companies having fewer than 50 employees and 98 percent having fewer 
than 500 employees. Industry growth--once expansive--has slowed 
considerably. The tax unequivocally hinders job expansion, economic 
growth, innovation, and global competiveness for American medical 
devices sold at home and abroad.

    As an Upstate, New York company for our entire 100 year existence, 
we note the special threat the device tax poses to the New York State 
economy. New York State's vibrant med-tech industry is the eighth 
largest medical device presence in the nation, employing over 13,000 
people with a net economic impact of $4.6 billion. The medical device 
industry plays a vital role particularly in the struggling Upstate New 
York economy, employing over 8,400 individuals. Already in decline 
since 2001, the tax places significant additional burdens on device 
makers statewide.

    Proponents of the device tax claim that any burden it creates for 
companies will be offset by an increase in sales due to the growth of 
the insured population under the Affordable Care Act (ACA), or that 
device makers can and will pass the cost of the tax on to their 
customers. However, in reality, this premise is erroneous. No such 
offsetting or positive factors or windfall has arisen, or is expected 
to; moreover, not only have the average sales prices for many medical 
devices not increased, they have eroded. Most Americans who need the 
most expensive medical devices already were covered under Medicare, so 
the ACA has had no impact, other than a negative one.

    It should be clear that strong bipartisan Congressional support 
exists for repeal of the device tax. Currently, the House Bill, The 
Protect Medical Innovation Act (H.R. 160) has garnered 277 co-sponsors, 
including 36 Democrats. The Senate companion legislation has 35 
cosponsors. Both the House and Senate have shown support since 
enactment of the ACA for repeal of the medical device tax. Welch Allyn 
urges Congress to act now and repeal this tax for good. Again, we thank 
the Senate Finance Committee for your willingness to address such an 
important issue, and we urge you to move beyond this hearing to a 
timely full Committee markup and passage of the device tax repeal 
legislation.

                                 ______
                                 
                           Wenzel Spine, Inc.

                      Simple. Dependable. Proven.

      206 Wild Basin Road, Building A, Suite 203, Austin, TX 78746

                    P: 512-469-0600 F: 512-469-0604

                        E: [email protected]

April 21, 2015

U.S. Senate Committee on Finance
219 Dirksen Senate Office Building
Washington, D.C. 20510

RE: IMPACT OF THE MEDICAL DEVICE TAX

Senate Finance Committee Members,

I am writing on behalf of our team at Wenzel Spine to relay the real 
world impact the Medical Device Tax, imposed by the Affordable Care 
Act, has had on our company in the last 16 months, since the tax was 
implemented in January 2014.

Wenzel Spine is an early stage medical device company. We are currently 
bringing to market a unique minimally invasive implant for use in spine 
procedures. This device shortens surgery time, shortens patient 
recovery time, and reduces overall cost of implant and use of 
healthcare services by patients. The exact technology desperately 
needed in our current system of high costs, and overutilization of 
services.

We operate in one of the most regulated industries in the world. In 
addition to normal business start-up costs, we content with enormous 
regulatory costs associated with the FDA, and reimbursement costs to 
gain approval from HHS all while prices are declining in the 
marketplace. The Medical Device tax is an incredibly regressive tax on 
an industry that is already under tremendous cost and pricing 
pressure--especially to small, start-up companies with limited 
resources.

The following are several examples of the direct impact the Medical 
Device Tax has had on our company:

    We have delayed the hiring of 3 management positions, each with 
        over $100,000+ basecompensation.
    We have downsized our engineering team, eliminating two $100,000 
        engineering positions.
    Our headcount budget for 2015 will remain neutral (i.e. we will 
        not increase our total number of employees).
    We have delayed the launch of a new product.

The Medical Device Tax has a real negative impact on job creation, 
innovation of new products, and ability for new ventures (the engine of 
U.S. job growth) to gain new funding and launch new products.

Even though we are an early stage, pre-profit company, we are subject 
to the same 2.3% excise tax on gross revenue that billion dollar multi-
national corporations are subject to. No other industry in the U.S. has 
to contend with the costs that the Medical Device Industry now faces.

While I support the immediate repeal of this tax for the entire 
industry, if that is not possible, surely they is across the board 
support to eliminate the tax for small Medical Device Companies who are 
in early stages and cannot execute on their growth plans with this 
onerous tax.

I appreciate your continued attention and leadership on this matter.

Thank you.

Chad G. Neely
CEO
Wenzel Spine, Inc.
[email protected]
direct: (512) 501-4016
                                 ______
                                 
                                 Zimmer

April 22, 2015

The Honorable Patrick J. Toomey
Chairman
Subcommittee on Health Care
Committee on Finance
U.S. Senate
Washington, D.C. 20510

Dear Senator Toomey:

On behalf of Zimmer and its approximately 150 employees in Pennsylvania 
and over 5,000 employees in the United States, I am writing in support 
of your efforts in the U.S. Senate to examine the impact of the medical 
device excise tax. The Health Care Subcommittee's hearing, titled ``A 
Fresh Look at the Impact of the Medical Device Tax on Jobs, Innovation, 
and Patients,'' is important and timely.

Zimmer is a leading orthopaedic medical device company based in Warsaw, 
Indiana. The Company has opposed the medical device tax from the start 
and continues to work with AdvaMed and other stakeholders to repeal the 
tax. As AdvaMed notes in its testimony submitted for the record as part 
of this Subcommittee hearing, the device tax continues to impose a 
significant cost burden on a vibrant medical device industry that 
contributes positively to the U.S. economy through advanced R&D and 
manufacturing, high-paying jobs and exports.

Medical device companies, such as Zimmer, continue to take significant 
steps to offset the bottom-line impact of the tax, including 
restructuring global operations and diverting capital away from key 
projects and investments. For instance, as a recent AdvaMed survey 
noted, many medical device companies are scaling back R&D initiatives. 
Passing on the cost of the tax is simply not an option, given the tight 
reimbursement environment for our customers.

The device tax also worsens a corporate tax code that is already 
globally uncompetitive, thus undermining the competitiveness of a U.S.-
led medical device industry, which supports hundreds of thousands of 
jobs in this country. Most importantly, the device tax will continue to 
adversely impact the development and introduction of new and improved 
medical devices, a natural consequence of tough decisions being made to 
offset the cost of the tax through reduced spending on R&D. This will 
ultimately jeopardize patient access to medical innovation and harm 
health care quality.

Zimmer appreciates the opportunity to provide input into the 
Subcommittee hearing. The Company joins AdvaMed and its other member 
companies in commending you and your Subcommittee colleagues for 
holding this hearing on the medical device tax. Zimmer looks forward to 
working with its industry colleagues, other stakeholders and a growing 
number of members of Congress who support repealing the device tax. 
Thank you.

Sincerely,

Christopher A. Cerone
Vice President
Global Government Affairs

                                 ______
                                 
                 ZOLL' LifeVest'

            121 Gamma Drive, Pittsburgh, Pennsylvania 15238

                 800-543-3267 (main) 866-567-7615 (fax)

                              www.zoll.com

May 6, 2015

The Honorable Patrick J. Toomey
Chairman
U.S. Senate
Committee on Finance
Subcommittee on Health Care
248 Russell Senate Office Building
Washington, DC 20510

The Honorable Debbie Stabenow
Ranking Member
U.S. Senate
Committee on Finance
Subcommittee on Health Care
731 Hart Senate Office Building
Washington, DC 20510

Dear Senators Toomey and Stabenow,

Western Pennsylvania is fortunate to be a leader in one of the most 
innovative and dynamic industries in the world: medical device 
manufacturing. The local companies that participate in this high-tech 
industry provide the good paying jobs that our nation needs and enable 
health care providers to give the best possible patient care.

As the leader of a rapidly growing local medical technology company 
based in Pittsburgh, I know firsthand the ingenuity and skills of 
western Pennsylvania's workforce. Every day, some of the brightest 
entrepreneurs, engineers and physician-inventors are developing and 
improving cutting-edge medical devices. We have a superior skilled 
manufacturing base that produces them and provides the best possible 
service and support.

I strongly believe that the medical device tax has inhibited 
innovation, slowed job creation and harmed patient care. It takes years 
of substantial investment to introduce a new or improved device, and I 
know firsthand that companies are often not profitable while growing 
and creating jobs. Amazingly, the tax is applied to the sales, not 
profits, of medical device companies. This means that these companies 
would actually still owe the government a hefty tax bill, despite not 
having a penny in profits. Advocates of the tax argue that the cost of 
the tax can simply be absorbed by medical device companies or passed 
along to the customer; however, it is far more complicated than that. 
Passing along cost as a price increase to the health care system 
directly contradicts many of the goals of health care legislation, and, 
in a system with fixed reimbursement, additional costs directly impact 
the ability to create jobs. In response to the tax, companies have been 
forced to lay off employees, cut back on research and development, or 
both. If the medical device tax is not repealed soon, the impact of the 
necessary operational and executional decisions companies are being 
forced to make in response to the tax will permanently harm the 
leadership position of the United States in the medical device 
industry.

The medical device industry is responsible for more than 400,000 
American jobs--and is indirectly responsible for almost 2 million jobs 
that supply and support this highly-skilled workforce. Here in 
Pennsylvania, it is responsible for over 22,000 jobs, and the medical 
device manufacturing job pays 25% more than the average manufacturing 
position. In fact, Pennsylvania has the highest job-multiplier in the 
country, meaning that for every medical device job, 3\1/2\ jobs were 
created to support and supply this vibrant industry. While 
congressional leaders urge us to increase exports, the medical device 
industry is one of the only net-trade exporters in the United States, 
with a trade surplus of $5.4 billion in 2007.

America's medical device industry is widely recognized as the global 
leader in this field, though a recent PwC report stated that we could 
lose this leadership position in the next decade if we do not continue 
to grow and innovate. We simply can't let this happen--we need to 
repeal the medical device tax to allow America's medical device 
innovators to drive leadership in the future.

Sincerely,

Marshal Linder
President and COO
ZOLL LifeVest

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