[Congressional Record Volume 157, Number 166 (Wednesday, November 2, 2011)]
[House]
[Pages H7249-H7253]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICAL TECHNOLOGY CAUCUS
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 5, 2011, the gentleman from Minnesota (Mr. Paulsen) is
recognized for 30 minutes.
Mr. PAULSEN. Thank you, Mr. Speaker.
For the next few minutes, some of us who are members of the Medical
Technology Caucus are going to share some of our thoughts about some of
the recent troubling developments that are threatening this American
industry. I will tell you, as cochair of the Medical Technology Caucus,
in Minnesota, I get a chance to tour these companies. We all know the
big names of the big titan companies; but nearly every week, I get a
chance to tour one of these small companies that might have five
employees, that might have 10 employees--companies that are not yet
profitable.
They're working on these really innovative and neat technologies that
are there to help patients improve their lives and save their lives. In
fact,
[[Page H7250]]
Mr. Speaker, from 1980 to 2000, the medical technology firms were
responsible for a 4 percent increase in U.S. life expectancy, a 16
percent decrease in mortality rates, and also an astounding 25 percent
decline in elderly disability rates. I think, as we'll hear from some
of our colleagues, particularly from the Indiana delegation, which is
where we were just about a week and a half ago, we're learning there
are some new hurdles on the horizon.
Number one, there is a medical device tax that will be imposed in
just a little over a year. It's a $20 billion tax, and studies have
shown it's going to cost the industry about 10 percent of their
workforce. It's about 43,000 jobs that will be at risk. In fact, I just
met with an owner of a company today who mentioned that he believes
this excise tax, if put in place 1 year from now, will cost his company
at least 50 high-paying jobs.
Then you have the other issue of just an FDA that has become so
bureaucratic, so unpredictable, so inconsistent, and so nontransparent
that it's becoming more difficult for these companies to bring these
lifesaving technologies to market to make sure that the patients have
access to them.
I have traveled the country--to California, to Boston, to New York,
and we'll have a chance to go to North Carolina--where these pockets of
industries in the medical technology field are really strong and
vibrant. One area in particular was Indiana.
We were there just a little over a week and a half ago, and I will
tell you, of the folks who testified there--the companies and the
presence there and the jobs there--it was compelling. In fact, I'll
never forget the words from one of the testifiers there at the
committee when he mentioned, when he gets asked for advice on where to
invest, on where to start up, that his advice to new companies is, Go
to Europe. Go to Europe.
That is the wrong message.
Mr. Speaker, in this down economy, when we are trying to save jobs,
when we are trying to encourage job creation, we're encouraging one of
our best American success stories, one of our few net exporters, to
move overseas.
We've got legislation that's actually moving forward now. Many of
these members are coauthors of not only repealing the tax but also of
streamlining and modernizing the FDA to make sure we're doing what
Europe is doing, for instance, and to make sure we don't have as high a
hurdle. We want to make sure there is a strong, relevant, rigorous
process at the FDA because these companies want the gold standard. They
want the gold standard of approval, but they don't want the goalpost
moved in the middle of the process to make it so ridiculous that their
investments are not going to be worthy of the risk/reward that they
hope to have pay off.
When we were in Indiana, we had a bipartisan gathering of Mr. Rokita,
Mr. Young, Mr. Stutzman, and Mr. Donnelly who were there, along with
Representative Guthrie from the Energy and Commerce Committee. They
took the time to come out, to listen to these companies that testified
and also, more importantly, to listen to the patients. We had a patient
testify as well, Sheila Fraser, who is a young high school student who
was testifying about a device that was implanted in her leg. It truly
is an amazing success story because, in a lot of cases, folks like her
have to have amputations, and this is a device that is now improving
her life.
So I think, as much as we like to talk about the jobs and the
economic benefits, it's also just as important to hear it from the
patients' perspectives as to how these lifesaving technologies are
helping them and how these life-improving technologies are helping
them.
As I mentioned earlier, we've been to California, and Mr. Bilbray is
going to talk in a little while. This is an industry that covers many
spectrums of the economy across the country. So I just want folks who
are watching out there in America to understand there are some of us
who really care about this industry. We're fighting for it, and we
appreciate the input and dialogue that we've had as a part of that.
With that, Mr. Speaker, I want to first yield to the gentleman from
Indiana (Mr. Rokita), who has been a leader already on this issue and
has helped us get coauthors to repeal that onerous innovation tax.
Mr. ROKITA. I thank the gentleman for yielding. I also thank the
gentleman for his leadership.
We were pleased to welcome you to Indiana, and I know you get that
same kind of welcome all over the Nation.
The gentleman from Minnesota, I think, has done an excellent job in
making sure that this issue not only was formulated the right way, not
only was formulated in a bipartisan way, but is now on the verge of
going through committee and coming to the floor so we can take action.
What action are we speaking of?
There is an insidious tax that was put in the new health care law, a
law colloquially referred to as ObamaCare. It is a 2.3 percent tax on
innovation. I often get asked in Indiana's Fourth District and in other
places around the State: How do we stay competitive? Why are you
letting jobs go overseas?
I am the first to point out that to succeed in this country, to
succeed in this Nation, if we are to be prosperous--to maintain and
increase our prosperity in the 21st century--we have got to stay a step
or two or five ahead of our competition. In Indiana, we're not
competing with people in Fort Wayne or in Jeffersonville or in Terre
Haute. We're competing with people from places that we can barely
pronounce, meaning not in the United States. No country was ever
ultimately successful by building a wall, whether it's a physical wall
like we found in ancient China or an economic wall like we see with
tariffs or, in this case, with taxes on companies and on an industry
that continues to innovate, that continues to keep us on the cutting
edge of what the world is doing in this area. That's important. That is
the key to our success.
By taxing these devices, by taxing this industry, you're not going to
get more of it; you're not going to get more innovation. You're going
to get less. If you want less of something, you tax it. By the way,
when you do that, you're not even going to get more revenue to pay for
that all-inclusive, government-run, bureaucrat-interpreted health care
system.
{time} 1650
I'm really pleased to be a cosponsor. I continue to learn on this
issue. I learned a lot from the field hearing that was done.
I would like to echo the point that was made: This was a bipartisan
hearing. Just like in the last hour, we saw in a bipartisan way that we
have to live within our means, and we can do that through a balanced
budget amendment. We had Democrats come to speak on that.
At the field hearing we had on the repeal bill of the medical device
tax, we had that same kind of bipartisanship. Bipartisanship does
exist. It exists in Indiana. And with this bill, it can exist here on
the House floor as well.
I was alarmed as well. The person testifying was Steve Ferguson from
the Cook Group. Mr. Cook, when he started his company, he started from
a spare bedroom in his apartment and grew it to a multibillion dollar
operation. He is one of the best examples of an American success story.
And his partner, Mr. Steve Ferguson, who testified--I will back up Mr.
Paulsen in this--said, when new startups come to him, when young men
and women come with an idea and want to start a company, he says, go to
Europe. Not because he isn't a true-blooded American patriot, but
because he's giving honest advice.
Now what does that say about our Federal Government? What does that
say about our bureaucracy when, instead of going through the FDA
approval process, the best advice is to go through the bureaucracy of a
union of countries that can barely stay afloat because of the debt
they're incurring? Where does that put us in a 21st century world?
Where does that put us in terms of our ability to continue innovating,
in terms of our ability to be prosperous?
We have got to put the swords down, as it was said earlier. We have
got to come together and realize that it's that innovation, it's that
economic freedom, it's that liberty to associate and provide an equal
opportunity for one's own success that has made us the best and most
successful experiment in self-governance that the world has ever known
[[Page H7251]]
and, as a result, has kept us on the cutting edge of profit-making
innovations that employ people, that keep taxes low, where we've proven
time and time again that the way to success is doing the opposite of
levying a tax, by letting individual men and women rise and fall on
their own decisions. That's what this medical device bill does.
Thank you for sponsoring this time, Representative Paulsen. It's been
an honor and a privilege and a pleasure to work with you.
Mr. PAULSEN. I thank the gentleman again for his leadership. I just
want to mention too, you had mentioned all the authors of this bill
that are trying to repeal this onerous tax. There are actually 204
Members now, Mr. Speaker, that want to repeal this tax, bipartisan
support. The amount of money this tax is expected to raise is actually
equal annually to the amount of money that's invested in the industry
every year. So it is a very wrongheaded move.
One of the first coauthors of this bill that would repeal this tax
and who, I think, recognizes the importance of this industry is my
friend and colleague from Pennsylvania. I yield to him and thank him
for his leadership and for being a part of the caucus effort.
Mr. ALTMIRE. I thank the gentleman from Minnesota. I can't think of
anybody in the Congress who has done more for medical innovation, his
leadership on the medical device tax, on FDA reform issues, than Mr.
Paulsen. It's an honor for me to be here tonight to discuss this issue
before the House.
What we have done in a very strong and forceful bipartisan way, which
is critically important and something we don't do nearly enough of in
this Chamber, is to send a message that we want to protect the medical
device industry in America. The innovations that are created in this
country are second to none. The way that we handle the FDA process
could be improved, and we are going to talk about that shortly.
But with regard to medical device issues in particular, I'm fortunate
that the district I represent is home to a number of large and small
medical device manufacturers that are doing great work right here in
America, producing medical devices that we rely on in this country,
that millions of Americans depend on.
And when we last year, in the last session of Congress, went through
the debate and eventually passage of the health care reform bill--which
I voted against--one of the issues that was in there was the medical
device tax, which seemed pretty arbitrary. They were looking for
sources of funding. They were looking for ways to make the bill come
into balance. And one of the industries that they targeted for the tax
was the medical device industry. I believe very forcefully that it was
shortsighted. I think it was something that should not have been done.
That's an industry that we have international leadership on in this
country. It's an industry that millions of Americans have an everyday
benefit from.
What we did was say, Well, you look at the portion of overall health
care costs in the country that that industry represents, and you are
going to create a tax that's going to pay for approximately that
portion of that industry to go towards the health care bill. I didn't
think it made sense then. I don't think it makes sense now. What I want
to do, along with the gentleman from Minnesota and the other 202--the
total of 204 cosponsors of this legislation--is just put common sense
back in place to say, we want to continue to have those innovations
take place in America, not in other countries; to continue to show the
worldwide leadership that we have shown and to continue to allow
American citizens to benefit from the great work that's being done
across the spectrum, large and small, of medical device manufacturers
in this country.
So the $20 billion cost that's associated with this tax is just the
tip of the iceberg. We're going to lose a lot more than just the cost
of what it's going to take to pay that tax if you're in the medical
device industry. We're going to lose the innovation. We're going to
lose the talent because we're competing with other countries for the
top talent in the world, and where individual people want to reside
when they undertake research and development of new drugs, new
pharmaceuticals, and also new medical devices. This tax is absolutely
the wrong thing to do, and I strongly support the gentleman's effort to
repeal the tax. We're going to talk later on, and I'm going to join the
discussion on FDA reform and some of the things we're doing, working
together, but this medical device tax, the reason it has attracted
bipartisan support for the repeal is because it makes no sense. It's
burdensome, and it's absolutely the wrong thing to do.
Mr. PAULSEN. I thank the gentleman again for his leadership and for
really standing up for Pennsylvania companies and understanding this is
an American success story, as he outlined. He is actually a coauthor of
some bills that are there to streamline and modernize the FDA, which we
will talk about in a second as well.
We also have my friend, the gentleman from Indiana, here as well. Mr.
Stutzman, I think you were at the hearing. Maybe you could share some
of what you learned from the hearing in Indiana.
Mr. STUTZMAN. I thank the gentleman from Minnesota. It was a great
day for us because of the things that we learned from those folks who
testified at the hearing there in Indianapolis.
Those of us in Indiana, we love racing, we love agriculture, we love
manufacturing. But we also have an industry there that we are very
proud of and is one of the emerging businesses for the world. The
orthopedic industry has $36 billion worldwide in revenue. And I am
fortunate enough to represent Indiana's Third Congressional District,
which includes the city of Warsaw and the areas surrounding Warsaw,
which is the orthopedics capital of the world.
I can tell you, you hear a lot of the great stories about racing from
Indiana. There are also great stories about companies that started in
apartments or in a garage from folks in Indiana in this particular
industry. It's an industry that I believe is so beneficial to people in
a personal way. I can tell you myself that my grandmother had two of
her hips replaced. And that is the industry that we are talking about;
knees, joints, hips, other parts of our body that can be replaced to
increase the quality of life that we enjoy.
{time} 1700
My grandmother had her hips replaced, and I know what it did for her.
This industry was really started about helping people and increasing
the quality of life that people have. We had a young lady there, Sheila
Fraser, who the gentleman from Minnesota mentioned. What a great story.
What an amazing young lady. She is a senior from Mishawaka, Indiana,
who had a knee replaced because of cancer in her bone. They can take
this particular device and extend it. As she grows taller, as her body
grows, they can adjust this particular device inside her leg as she
continues to grow. It's amazing technology, and that's why it's so
important for us to protect this industry, to do no harm to the
industry because it's growing fast. At a time when America is facing
high unemployment rates, this industry continues to grow. These are
high-paying jobs.
I know it is a huge benefit to the part of Indiana that I represent.
The jobs that are created, these are jobs that pay well and the type of
jobs that we want to keep right here in America.
As we talked about this tax, it is going to be a burden on these
businesses and on these jobs. I can tell you already after talking to
the folks in northeast Indiana at these businesses that there are other
countries like China. China has a growing population. You have other
countries that are starting to advance in bioscience, and this is why
it is so important for us to make sure that we don't affect this
industry in a way that it will start looking to other countries like
China or India, other places around the world. Europe, obviously, is
already a mature market. China is an emerging market, and they want
these particular devices built there. If we build them here, we can
export them to countries like China, and they can be buying American-
made products from companies and people who live in my community where
they are building these particular devices.
As was mentioned, 204 Members of the House of Representatives are
signed on to the repeal of this tax
[[Page H7252]]
which I believe is a great number, almost a majority. I would urge our
leadership to bring this bill forward to the floor for a vote because
we know if this tax stays in place, these companies are going to start
looking elsewhere because this is a huge burden upon them.
I thank each Member who was at the hearing in Indianapolis. We saw
some fantastic, amazing things that are being developed. And if we can
keep government from hindering this type of technology, this type of
growth, we're going to lead in new ways in manufacturing. We have the
automobile industry and the steel industry. This is an emerging market
that will continue to grow as people gain in wealth and they gain in
access to these types of services in the health care industry.
I would just encourage all of my colleagues to sign on to this piece
of legislation because we don't want to see this type of industry move
outside of the United States. I appreciate Mr. Paulsen and his
leadership.
Mr. PAULSEN. As you mentioned, I think one of the things that folks
don't often recognize, the medical device industry is high-value
manufacturing. Boy, I think of a State like California and the high-
value manufacturing that exists there. I visited some companies in
California one time, and I would like to yield to Mr. Bilbray who has
been a leader on moving some of the packages of bills to help
streamline the FDA and to modernize the FDA as well.
Mr. BILBRAY. I thank the gentleman.
Mr. Speaker, the gentleman is leading on not just an issue of jobs.
This is an issue of jobs and lives. I think that is one thing we
overlook so often. I am glad to hear about the hearing in Indianapolis
because we had a hearing in San Diego. I'm sure that you guys are glad
that you didn't have to come to the hearing in San Diego because we
were in La Jolla overlooking the beach and the surf at the Scripps
Institution of Oceanography. But maybe some day you will be able to
break away and come to one of our hearings down in San Diego.
But, Mr. Speaker, we're talking about an issue that is not discussed
enough. I guess one of the issues that I'm really excited about on this
one is it's a bipartisan effort. If there was one thing I want everyone
to know about Washington, D.C.--Democrats, Republicans or
Independents--the biggest problem with this town isn't that Washington
tries new things or that Washington makes mistakes; but when Washington
tries new things and makes mistakes, they're not willing to go back and
correct it and straighten it out. They ignore it.
In fact, a lot of times they think the only problem is just throw
more money or taxes at it or more regulation, and somehow it will make
it better. I think this is one of those items where Democrats and
Republicans should get together and say, Look, this was rushed through,
really wasn't looked into in depth and needs to be corrected and
straightened out.
That is what this bill, both the gentleman's bill and my bill say: We
need a step back period, a cooling off time, and let's look at this and
straighten this out. And the first thing we have to do is take this
huge tax off the back of not just the producers but the American
consumer. We're talking about a tax of $20 billion on an industry that
can ill afford this kind of burden, especially at this time. We're
talking in California alone 112,000 jobs, and something that all of us
will say later if we lose these jobs, Oh, my God, how could we have
done this. More importantly, we are talking about those lives of the
people who depend on not just those devices that are out there today,
but those that will be out there in the future.
Is there anyone here that can assure themselves that their children
or grandchildren or granddaughter or grandson or even their mother or
father won't need to have medical devices somewhere down the line, not
just to improve the quality of life, but to ensure life extension? Or
the fact of just being able to survive certain medical crises? Those
are all questions that we need to ask ourselves individually. But as a
Nation, we need to ask ourselves: Was this the right step for us to
take at this time or at any time? And if it wasn't, we have to be brave
enough to do what Washington doesn't do enough, and that is go back and
correct the mistakes and move on in a much better and much more secure
form, something that can be substantiated.
Let me be very blunt, as someone who has a major medical device
industry in my community, that there are ways we can correct these
things. Anna Eshoo and I, back in the 1990s, actually did tort reform
for medical devices. There was a kind of bipartisan support of it
saying put politics aside and put people first, and when it comes down
to it, you do not provide health care to the public by taxing it out of
the country. You're not going to make those kinds of opportunities
available to either the people who need the jobs or those who need the
medical breakthrough.
I want to say again that I look forward to working on this, and I
look forward to working on a bipartisan effort with my colleagues on
both sides of the aisle, things like FDA reform, which is going to be
another essential step that we have to do to make sure that we keep
this vibrant industry here, or we will all rue the day, Democrat and
Republican, if we allow it to leave the country and the jobs and
medical breakthroughs go with them.
Also, the huge resources that we have for more research and
development to be brought back into this country by repatriating
American money that is overseas, that is being kept overseas, but
because of punitive actions of the Federal Government here in
Washington, D.C., $2 trillion that could come back to help do research
and development, to save lives, to develop the next generation of
medical devices, to be able to create that opportunity in economics and
in medical breakthroughs, that's the kind of thing that we need to see
Democrats and Republicans work together on.
I look forward to building on the cooperation we see in this bill,
and work on it in other bills related to public health and the economic
opportunities of creating jobs in America with American jobs on
American soil.
Mr. PAULSEN. I thank the gentleman for being a leader. When folks
think of States like California, they think of high technology and
medical devices, but it's the investors who have a large component in
States like California that invest in these companies. Unfortunately,
the FDA has become so risk averse that the investors aren't investing
the resources needed to start the new products, and that's the pipeline
going over to Europe. That's the challenge we have.
Someone else at the hearing a little over a week ago was my friend
and colleague, Mr. Young, who also heard some of these personal stories
not only from the patient perspective but the innovator perspective.
I want to thank the gentleman from Indiana for his leadership and for
inviting me to be a part of that hearing in Indiana.
Mr. YOUNG of Indiana. I thank the gentleman from Minnesota for his
leadership and I certainly share your desire to lighten the burden on
this high-value-added industry. We need to ensure that all of the
manufacturing jobs, all of the job and economic growth opportunities
that we can help create an environment for, a nurturing environment
for, that we do.
{time} 1710
One thing that I hear as I travel around southeastern Indiana and
listen to my constituents, there's a lot of feedback about the level of
uncertainty within our economy. There's regulatory uncertainty, there's
uncertainty about future tax rates, and there's uncertainty about
energy rates and health care costs. And so these medical device
manufacturers are certainly laboring under the burden of uncertainty
with respect to the FDA regulatory process. And then here we add an
additional excise tax to their bottom line. And so I'm happy to support
H.R. 436, which would lighten that burden.
I don't think probably many people appreciate--I certainly didn't
appreciate it until I started looking into it--exactly how burdensome
this device tax could be on the medical device industry. The tax is 2.3
percent of gross sales. So that's a top-line tax before all the other
deductions and costs come out. So, essentially, that would translate
into about 15 percent taxation on profits of many of these medical
device companies. You add that 15 percent profit tax to 35 percent
corporate tax
[[Page H7253]]
and the 5 percent tax when you add together the State and the local
corporate tax burden, and you're north of 50 percent of tax on profits.
So it's no wonder that so many of these device makers are instead
deciding to expand their operations or start up new operations
overseas. And we have to do what we can to prevent that.
Now, in my home State of Indiana, approximately 40 percent of all
life sciences sector jobs are related to this devices industry, this
high value-added industry that improves the lives of so many patients
and certainly all the workers who work at these companies. My district,
in particular, has some employers that we'd like to keep around, like
the Cook Group in Bloomington, my hometown. And then as we head further
south to Jeffersonville, Indiana, we have MedVenture. And there are
people everywhere in between that work at this company.
The tax impact is going to burden not just the large companies,
however. There are 300-plus FDA-approved medical device manufacturers
in the State of Indiana. And as my colleague from Minnesota just
indicated, they're all searching for financing. They're searching for
venture capital to bring their fledgling operations to the next level.
So a Cook Group could probably weather this storm and figure out some
way to remain profitable, but it's the next Cook of the world, the next
tinkerer in their garage or their spare bedroom that may not be able to
grow their business and create the jobs that our constituents are all
demanding should this device tax go into effect January 1 of next year
as it's currently scheduled to do.
The regulatory challenges which I've already mentioned are also very
important. They must be addressed separately. I know there's separate
legislation out there to do that, and I will be supporting that
initiative as well. But the bottom line here is that there are jobs at
stake and there are people's lives at stake as well.
We heard very powerful testimony from Sheila Fraser. Her name has
been mentioned here before. She is an outstanding young lady, a high
school student, who at a very young age contracted cancer, and she was
going to have to have her leg amputated. And because of the ingenuity
and the entrepreneurship of people in my home State of Indiana, they
were able to put together a company and sell these products and develop
a product that benefited Sheila Fraser directly. And now she's living a
very productive life, and she has both of her legs, thank the Lord. And
we need other people to benefit from similar sorts of innovations in
the future.
I am most proud to be here to speak on behalf of H.R. 436. I urge my
colleagues to sign on to this legislation and to vote in favor of it.
Mr. PAULSEN. I thank the gentleman. I'm not sure how much time we
have left in our colloquy, Mr. Speaker.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. PAULSEN. Thank you, Mr. Speaker.
____________________