ShareThis Page

Don't kill our med- tech jobs

| Thursday, Oct. 24, 2013, 8:55 p.m.

Pennsylvania's got potential — economic potential, that is. According to a new survey, the Keystone State has the ninth-best prospects for growth among the 50 states.

Propelling the state's rise is a burgeoning medical-technology sector, which supports more than 79,000 jobs statewide and contributes more than $13 billion to the economy.

But those jobs are under attack, thanks to a federal tax on medical devices that took effect earlier this year. Repealing that tax would ensure that Pennsylvania can capitalize on its growth potential — and generate thousands more good-paying jobs.

Pennsylvania has a long history of medical-device manufacturing leadership. As the fourth-largest producer of medical devices in the United States, the state supplies the world with everything from pacemakers and prosthetic limbs to heart defibrillators and insulin pumps.

The medical technology sector is responsible for 22,000 jobs directly — and supports nearly 80,000 jobs after taking indirect employment into account. And these are high-quality jobs. The average annual wage for a med-tech worker is more than $50,000.

But the federal government has placed Pennsylvania's thriving medical technology sector in its crosshairs. In January, the feds slapped a $30 billion excise tax on the sale of medical devices, increasing a company's tax burden by almost one-third.

Companies must pay the tax bill based on their revenues — not their profits. So even firms that lose money have to pay it. That's especially detrimental to small businesses and startups that may be on the threshold of making a profit.

Like many innovative sectors, the medical technology industry is fueled by startups developing one specialty product. Eighty percent of medical device companies have fewer than 50 employees.

All told, the tax could result in the loss of an estimated 43,000 American jobs.

Companies are already feeling the financial impact of the tax. Over the past eight months, medical-device firms have paid more than $1 billion to the federal government.

Med-tech companies are struggling to find ways to absorb the levy and none of the ways are good. Some companies have significantly reduced spending on research and development into the next generation of therapies and cures. Others have frozen hiring and expansion projects and, worse, some have had to institute layoffs.

Fortunately, Pennsylvania's leaders in Washington appear determined to make certain that those job losses don't migrate to the Keystone State. Sens. Pat Toomey, a Republican, and Bob Casey, a Democrat, are leading a bipartisan effort to repeal the medical-device tax. Seventy-seven of their colleagues have joined them on the record in opposition to the tax.

On the House side, 14 of Pennsylvania's 18 congressmen are co-sponsors of legislation to repeal the tax, including Republican Reps. Charles Dent and Tim Murphy.

Legislators from both parties recognize that the medical-device sector represents a bright spot in our economy — one that should be supported, not squeezed. Congress should finish the job and get rid of this job-killing tax.

Caroll H. Neubauer is chairman and CEO of B. Braun Medical, a medical technology company with U.S. headquarters in Bethlehem, Pa., and a board member of the Advanced Medical Technology Association, an industry trade association based in Washington, D.C.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.