Boston Scientific CEO to Congress: Repeal the Device Tax Now

Boston Scientific CEO Ray Elliott celebrated the Fourth of July by exercising his right to freedom of speech. Three days after an attempt to repeal the medical device excise tax stalled out, Elliott wrote an opinion piece in the Minneapolis StarTribune calling for Congress to “immediately repeal the medical device tax included in the year-old national health care law.”

Elliott’s reasoning: Device companies create well-paying jobs, which are sorely needed as Minnesota—a hotbed of device innovation—and the rest of the country struggle to recover from the recession. The 2.3% excise tax, he says, will cost device companies millions of dollars that would otherwise be used for research and development. Less R&D means fewer R&D jobs, he reasons.

The StarTribune also published an opinion piece by perhaps a future device company executive. Drew Page became familiar with the problems of the 510(k) process through a class at Wayzata High School, from which he graduated just this year. In his piece, Page lambasted FDA for what he calls its “risk-averse approach to the 510(k) program.” If it’s not reformed, he argues, the U.S. will lose its place as the world leader in device innovation, jobs will jump overseas, and small companies will disappear.

If I worked in the HR department at a medical device company, I’d be offering that kid an internship.

—Jamie Hartford


Re: device tax

To leech funds from the R&D budget by default to pay taxes doesn't represent a very smart stewardship.

If profitability is so devastatingly affected, an incremental increase of selling price must be made. The tax should be a write off.

I am a small company and taxes will lower my profitability until I am pushed to pass the cost on via my pricing.

I would rather support the community I am lucky enough to do business in, so that we are strong as a nation, than to argue a tax. This, to me, is the cost of doing business, the cost of national security.

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Medical Device Industry

Medical Device Industry typically makes very very small profit margins even the large Med Tech Companies. They re-invest so much of their revenue into R&D, clinical trials, paying off depreciation, and not to mention litigations. In this current economy the industry has been forced to adjust itself already. No longer are there as many individual clinics for specialists. Instead they are joining large hospitals which has shifted the market to more "bulk" buying of devices and has increased the buying powers of the consumer. This to has taken a bite out of the already thin profit margins. Even Johnson and Johnson one of the largest and best companies in the world who was a respectable player in the Drug Eluting Stent (DES) business had to step out of it because of the current economic conditions tied with the expectation that the Excise Tax is coming. They totally shut the doors on DES. To pay a tax for each device sold regardless if you made a profit or not is going to hurt the industry especially the smaller start ups. They are the ones who really come up with the new innovative products and sadly they will struggle to survive. They are the ones who don't post a profit for the first few years so in order to survive a tax like this they will have no choice to but to ship jobs overseas for cheaper labor and that is if they even have a chance. Most (not all as obviously companies like GE seem to avoid it) companies are taxed pretty well as it is and for the most part pay their fair share. Why would we want to further tax the solution to less evasive more affordable healthcare? Why do we want to create less incentive for Universities and entrepreneurs to start up a company? That's exactly what the tax will do. If they do not think it will survive why even try? Instead why don't we reform the tax system and get away from the games that go on.

The other sad truth is this is to fund the pathetic ObamaCare for 10 years after that there is no plan but to foot the bill on to the states which will have no source of revenue as it is to pay for it. Obama and friends passed a 10 year Band-Aid on a very serious problem. So more people have insurance for 10 years but they don't necessarily have access to care. Less doctors are accepting Medicaid and less people are becoming doctors because the system so hosed up. Oh yeah and more people are getting added to a public insurance that recent studies from the University of West Virginia have found no matter how you slice it Medicaid is a disaster for quality of life. ( go to and read Why Medicaid is a Humanitarian Catastrophe. That is one of many articles that present what is wrong with Medicaid.)

I agree with you that paying tax is the cost of business and is a fundamental responsibility that we have to contribute to our national security but it needs to make sense. This Excise tax and Obamacare are going to hurt our national security