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opinion guest_columns
Wednesday, October 14, 2009
Medical Device Tax Puts Our Jobs, Patients at Risk
By Angel Gonzalez
Ethicon Endo-Surgery, Inc.
For many of us in New Mexico, the health care reform debate is more than a sound bite on the evening news; it's personal. How will Congress' decisions affect patients who use the medical devices that my 600 employees make, and what will the impact be on these employees and their families? While many people here in New Mexico and across the United States support the idea of health care reform — cutting costs, expanding access, and improving quality — others question whether we are approaching this goal realistically.
Fortunately, lawmakers like our own Sen. Jeff Bingaman are carefully assessing the ideas being put forward to make sure they will improve, not harm, what exists today. At a time when jobs and innovation are especially fragile, it's critical that lawmakers understand the real impact of proposals such as the $4 billion annual tax on companies that make stents, artificial joints, pacemakers and other medical wonders. This tax would add costs to our health system and harm innovation and jobs.
Here in New Mexico, my company, Ethicon Endo-Surgery, part of Johnson & Johnson, makes surgical instruments that improve care by reducing the time patients are in surgery and recovery. We support health care reform, and we believe the approach taken by Senate Finance Committee Chair Max Baucus takes us in the right direction. We are ready to contribute our fair share to help pay for reform. But even on my factory floor, we are very worried about the proposed tax on medical devices and its impact on research, new products, patient access and jobs.
While health care reform will enhance access for many patients, reform will not mean great numbers of new “customers” for device companies. That's because most patients who need surgical procedures, such as hip and knee replacements or heart surgery, already have insurance, and many of the uninsured today receive hospital-based diagnostic and surgical care under indigent care programs.
Our nation's hospitals have already agreed to substantial payment cuts as a result of health care reform. As history has shown, they are likely to pass those cuts up the supply chain to device makers — adding another cut my factory in New Mexico must absorb.
Medical devices — like the high-tech surgical instruments we make here in New Mexico — are the result of years of research made possible by significant investments. Where would health care be today without defibrillators, pacemakers, staplers and stents for people with heart problems? What would the elderly and athletes do without artificial joints? How would wounded combat veterans function without artificial limbs? What would happen to burn victims without devices that help promote tissue growth? These are products no person should need yet be unable to access.
The current $4 billion-a-year tax would have been more than the $3.7 billion that venture capitalists invested in the device sector in 2007. Even at half that amount, the tax stands to drastically cut into medical device research budgets and threaten the discovery of new ways to treat and manage disorders.
The tax also threatens jobs. Across New Mexico, medical device makers employ about 1,000 people to develop and manufacture cutting-edge devices. Every one of our jobs generates another 4.5 jobs in other state industries. That's 5,500 jobs. We need to look for ways to continue to grow and keep productive jobs in our economy, not risk them.
Every sector of our economy has a role to play in health care reform. But reform should not be financed on the backs of patients who need medical innovation, and it should not harm the hard-working people in New Mexico and elsewhere who are bringing us all new and better treatments. We commend Bingaman for the care he has brought to understanding the issues, urge him to protect medical innovation and employment in our state and hope he will continue his leadership during this historic debate.
Angel Gonzalez is the plant manager of the Johnson & Johnson Albuquerque Ethicon Endo-Surgery facility.
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