Don’t kill our med- tech jobs |
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Don’t kill our med- tech jobs

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.

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