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Commentary: Hatch’s final act for Utah should be a repeal of the tax on medical devices

(AndrŽ Chung | special to The Salt Lake Tribune) Senator Orrin Hatch is the senior senator from Utah, Chairman of the Senate Finance Committee and President pro tempore of the United States Senate.

For more than four decades, Sen. Orrin Hatch has been fighting and winning on behalf of Utah. He is a living legacy of effective statesmanship and governing. And as the state’s senior senator concludes an illustrious career, there is one final battle left for him to win: repealing the medical device tax.

Each year, device manufacturers throughout Utah and across the nation create innovative medical technologies that help patients live longer, healthier lives. But these important medical innovations — as well as hundreds, if not thousands, of jobs in Utah — are threatened by the return of the medical device tax.

The impact of this levy has and will have far-reaching effects on patients, jobs and the economy. According to the U.S. Department of Commerce, the medical technology industry lost 29,000 jobs while the excise tax was in effect. Further, economists at the America Action Forum estimate that as many as 25,000 additional jobs could be lost by 2021 if the tax isn’t permanently repealed.

Hatch has been a leader on this issue for years. As chairman of the Finance Committee, he successfully won a suspension of the 2.3 percent excise tax on medical devices in 2015. But that suspension was only a short two-year reprieve, and as of Jan. 1, the tax returned unceremoniously. We need his help now, at this pivotal moment.

Since the tax is levied on revenues, not profits, the financial burden is even more devastating on smaller companies, which comprise more than 80 percent of the industry. Utah is home to over a dozen small medtech companies, and this tax takes a direct hit at the innovation ecosystem in the state. Harming these companies will create a ripple effect throughout the medical technology community, dampening investment in life-saving innovations.

The good news is that we know the benefits that can come from repealing the tax. During the prior years’ suspension, companies such as Merit, BD, Edwards Lifesciences and hundreds of others put those funds back into research and development, enabling us to accelerate innovation programs to deliver impactful therapies for patients. With the reinstatement of the tax, companies could be forced to slow development, ending some of these investments and making cuts in their place.

Those cuts could be devastating to patient health, resulting in an estimated reduction in R&D investment of about $2 billion each year. That doesn’t have to happen. According to a recent survey of medical technology companies, 85 percent indicated they would reinvest in R&D if Congress permanently repeals the tax.

The returning tax threatens Utah in a particularly harsh way. The medical technology industry contributes approximately $5 billion annually to Utah’s economy. Headquartered here, Merit Medical currently employs more than 1,700 people in Utah (4,700 worldwide) and is hoping to build a new 150,000-square-foot R&D facility that would create 500 high-paying jobs within the next five years. But the medical device tax will make that extremely difficult, if not impossible.

BD, which recently joined forces with Bard, employs more than 1,600 highly-skilled workers in Sandy and Salt Lake City. In Utah, the company manufactures a range of catheters and other devices to deliver and support the infusion of medication and other therapies. Edwards Lifesciences employs more than 1,000 in the state, manufacturing and advancing the company’s R&D of important technologies to address and treat diseases of the heart.

There is no one Utahns would rather have in their corner than Hatch. We are proud to have had him represent Utah in the Senate for the past 41 years. I’m sure he would agree with us, however, that he has a final charge to keep. We look forward to seeing him use his skill and passion for helping patients and families win one more fight on behalf of Utah and the nation by acting with urgency to accomplish permanent repeal of the medical device tax.

Fred Lampropoulos is chairman of the board and chief executive officer of Merit Medical Systems. Vincent A. Forlenza is chairman of the board and chief executive officer of BD. Michael A. Mussallem is chairman and chief executive officer of Edwards Lifesciences.