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Medtronic issues statement on impact of health care reform bill
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Like the passage of Medicare in 1965, the health care reform bill signed [last] Tuesday by President Obama will shape the future of U.S. health care and our industry for decades to come. Medtronic supports patient access to affordable, quality health coverage and new law takes our country in this direction. We helped to form several elements of this legislation, but there is no doubt it will have an impact on our business.
The excise tax on medical devices now included in the law was reduced from $60 billion to $20 billion over 10 years. It provides for a 2013 start date to coincide with coverage expansion; it will be a conventional excise tax with full deductibility; and it will cover all product classes with the exception of retail products like contact lenses and possibly many diabetes supplies, including continuous glucose monitors, which we manufacture. The impact of the tax, we estimate, will be roughly $150 to $200 million on Medtronic annually beginning in 2013. We have no immediate plans to eliminate jobs at Medtronic as a result of the device tax or health care reform. We accept our shared fiscal responsibility for coverage expansion, and are very appreciative of our constituent members of Congress from Minnesota and Indiana, in particular, for having significantly tempered the size, distribution and timing of the tax.
In addition to the tax, the bill also includes some positive changes like uniform federal standards for disclosure transfers of value to physicians for product development and training, something Medtronic has long supported. Relationships between physicians and companies like ours help fuel innovation and advance patient care. Also, the new law calls for the creation of a national body to study and compare the clinical effectiveness of widely used medical therapies. This research is designed to help patients and health care practitioners better understand which therapies work best for which patients.
We will stay engaged as the new law is implemented to ensure our ability to remain innovative and shape our business and our therapies to compete in this new environment.