A bill has been introduced in the U.S. House of Representatives that would repeal the controversial 2.3 percent excise tax on medical devices that went into effect in 2013 as part of the Affordable Care Act.

The Protect Medical Innovation Act, introduced by Rep. Erik Paulsen (R-Minn.), co-chair of the Congressional Medical Technology Caucus and a member of the powerful House Ways and Means Committee, garnered widespread support with 254 cosponsors including 27 Democrats. The tax, which imposes an excise fee on medical devices to help pay for costs associated with the ACA, has been heavily criticized by legislators and the medical device industry.

Similar legislation introduced by Paulsen in the previous Congress passed on two different occasions in the House but was not brought up for a vote in the Democratic-led Senate. However, the Senate did pass a non-binding budget resolution opposing the tax by a vote of 79-20. Now that Republicans control both the House and Senate in the just-convened new 114th Congress, the bill has momentum behind it.

“The medical device tax continues to stifle innovation, cost American jobs, and drive up healthcare costs despite bipartisan opposition in both houses of Congress,” Paulsen said in a written statement. “With over 250 cosponsors on Day One of the new session, it’s clear repealing this tax should be one of the priorities for the new Congress. The American people are looking for their elected officials in Washington to find common ground and repealing the medical device tax is a great place to start.”

According to the House Ways and Means Committee, the 2.3 percent tax is estimated to bring $29 billion to government coffers through 2022. However, a Congressional Research Service report late last year found that the 2.3 percent medical device excise tax should have a “relatively small” impact on the medical device industry, with manufacturing job loss limited to less than 1,200 employees. In addition, CRS said that industry output and employment likely will fall by no more than two-tenths of a percent.

Still, last March, the House Energy and Commerce Committee’s Subcommittee on Communications and Technology held a hearing at which Republican members charged that the 2.3 percent excise tax “looms large” over the mobile healthcare industry and that smartphones and tablets could be "tempting targets" for the medical device tax.

But, Democrats countered that smartphones and tablets are not listed with the U.S. Food and Drug Administration as medical devices so they are outside the scope of the medical device tax. Further, mobile medical apps also would be exempt from the tax because of the IRS “retail exemption” provision, under which devices are exempt from the tax if they are regularly available for purchase, used by ordinary consumers, and not primarily intended for use in a medical institution or by a medical professional.

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