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Daily Local News - Gerlach, Meehan Continue Fight Against Medical Device Tax

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Location: East Whiteland, PA

By Laura Booth

Congressmen Jim Gerlach and Patrick Meehan took their fight against the medical device tax on the road Tuesday with a visit to the headquarters of Neuronetics, a medical device company located in the township.

Gerlach, R-6th of West Pikeland, and Meehan, R-7th of Delaware County, were at Neuronetics to mark last week's passage of H.R. 436 -- the Protect Medical Innovation Act -- by the House of Representatives.

The approval of the measure represents a small victory in both congressmen's campaign to repeal a medical device tax originally passed as part of President Obama's 2010 health-care reform package.

Like many start-up medical device, pharmaceutical, and biomedical companies in Chester County and the region, Neuronetics would likely suffer if the medical device tax remains in place.

The measure -- a 2.3 percent tax on gross receipts -- is designed to generate roughly $29.5 billion in revenue for the federal government. But paying that money to the IRS translates into lost chances for young companies in need of that capital to reinvest in research and development.

"That's $29 billion that does not come back into companies like yours, to hire more people, to put more efforts into research and development to get to the next generation of product, and so as a result … those dollars will be lost," Gerlach said to an assembly of Neuronetics employees.

Gerlach and Meehan focused on the ability of innovative start-ups such as Neuronetics to create jobs in the still-sluggish economy. Although it is only 9 years old and has yet to make a profit, Neuronetics' is the pioneer of the only FDA-approved non-systemic, non-invasive depression treatment for patients who have not benefitted from prior antidepressant treatment.

The treatment, called Neurostar TMS (transcranial magnetic stimulation) Therapy, was featured in the short tour the congressmen took prior to speaking to Neuronetics' employees. They were invited to put the back of their hands up to the stimulation device that, during treatment, wraps around patients' skulls as it sends electronic impulses through their brain.

"Is it going to help my putting stroke?" Meehan joked.

Despite his earlier lightheartedness, it was Meehan who later remarked on the broad economic implications of a medical device that can help depressive patients return to active lives.

"I think first and foremost we talked about productivity, and … the most important opportunity here is for those who are currently suffering from depression to be able to become productive again. Making a difference in people's lives is really what this kind of an industry is all about," Meehan said.

If the medical device tax is not repealed, however, progress could be cut short not only in the form of limiting research and development but by reducing the rapid expansion of jobs in the field, the congressmen said.

"Full implementation of this tax over 10 years will probably result in about 45,000 jobs being lost in the industry. That's not a good thing," Gerlach said, citing a study by the Advanced Medical Technology Association on the probable effects of the tax.

Although the 2.3 percent tax sounds small, it could be crippling for start-ups because it is not a tax on profit -- in which case Neuronetics would currently be exempt.

Rather, as Meehan said, "Right now, close to a million dollars a year that could be put into the research and development, that could be put into the ability to expand the market for this product, could just simply be going to taxes."

Both Gerlach and Meehan emphasized the necessity of getting the legislation onto the floor of the Senate for a vote -- a task they said they expect could be difficult because of opposition from Senate Majority Leader Harry Reid, a Democrat.

"Now's the time, legislatively, to try to turn up the heat a little bit on the Senate and say, "Hey look, this is a very important piece of legislation for our economy and, particularly, for the medical device industry,' " said Gerlach.

Gerlach continued by saying he is "optimistic" for the prospects of bipartisan approval if the legislation reaches the Senate floor, especially in light of the support of 37 Democrats from the House of Representatives who voted in favor of H.R. 436 last week.

Said Gerlach,"Hopefully, Washington will figure out how to get out of your way, let you do what you do really well, and that's come up with new innovations and new technologies to help those that need it."


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